SRx Health Solutions, Inc.
For the period ended Jun 30, 2025. Filed Sep 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Sep 30, 2025
SRXH$0.81+1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001641172-25-011011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-09-30.
0001493152-25-016260
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 86 previous paragraphs and 79 current paragraphs.
26 unchanged; 13 reworded; 40 added; 46 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 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 (40)
Current report
At SRx, we make specialty healthcare simple for Canadians.
Current report
We are a fully integrated Canadian healthcare services provider operating at the intersection of pharmacy, clinical services, and pharmaceutical distribution. Our mission is to simplify access to complex therapies and improve health outcomes for patients with chronic, rare, or specialty conditions. Through the strategic development of the SRx Network—a national platform of advanced specialty healthcare infrastructure—we are redefining how specialty care is delivered across Canada.
Current report
The SRx Network includes approximately 30 specialty pharmacies, 37 specialty health clinics, two clinical trial sites, a diagnostics lab, national Patient Support Programs (PSPs), a multi-disciplinary allied health and nursing services team, and a fully owned, Health Canada–accredited pharmaceutical wholesale and distribution facility in Mississauga, Ontario. With operations spanning all ten Canadian provinces, SRx is one of the country’s most accessible and scalable providers of customized specialty healthcare solutions. Our geographic footprint and integrated model uniquely position us to deliver continuity of care while supporting a rapidly evolving specialty drug ecosystem.
Current report
Specialty drugs—the core focus of our clinical and pharmacy operations—are high-cost, high-complexity therapies used to treat chronic, complex, or rare diseases. These drugs often exceed $6,000 annually and require advanced logistics, clinical oversight, and patient engagement to be used effectively. As these therapies become more central to modern medicine, SRx’s infrastructure, experience, and national reach provide a meaningful competitive advantage.
Current report
Our platform supports a collaborative network of stakeholders, including physicians, pharmacists, nurses, PSP providers, pharmaceutical manufacturers, distributors, and third-party payors. This interconnected ecosystem enables us to streamline the management and distribution of specialty therapies—delivering value to patients, providers, and partners alike.
Current report
Looking ahead, we believe that increasing demand for specialty medications, alongside health system capacity challenges, will continue to drive strong tailwinds for our model. With an established footprint, a growing pipeline of partnerships, and a demonstrated ability to scale efficiently, SRx is well-positioned to expand our leadership role in Canada’s specialty healthcare landscape.
Current report
In 2023, the Company executed a number of strategic acquisitions aimed at expanding its national footprint, enhancing service capabilities, and strengthening its position in the specialty healthcare market. By contrast, 2024 saw a deliberate slowdown in acquisition activity, as the Company shifts focus toward integration, operational optimization, and organic growth initiatives across the existing SRx Network.
Current report
The Company was not in compliance with certain financial covenants related to its loan facility with Canadian Western Bank (“CWB”) as of June 30, 2025, which resulted in the debt being callable by the lender. During the quarter, the Company actively engaged in discussions with CWB to address the non-compliance. Subsequent to June 30, 2025, the Company sought creditor protection under a formal restructuring proceedings under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”). Refer to Note 23 – Subsequent events for more information.
Current report
On April 24, 2025, SRx Canada completed a business combination with Better Choice Company, Inc. Refer below and to Note 4 – Business Combinations for further information.
Current report
On April 30, 2025, Better Choice Company, Inc. completed its name change to SRx Health Solutions Inc. and started trading under the new ticker symbol ‘SRXH’ on the NYSE American. Concurrent with the transaction events, the following management team and Board of Directors changes occurred: Michael Young resigned from his role as Chairman and remained on the Board; Adesh Vora was named Executive Chairman of the Board; Kent Cunningham remained in his role as Chief Executive Officer; Carolina (Nina) Martinez remained in her role as Chief Financial Officer; and Davender Sohi was named President.
Current report
On June 10, 2025, Davender Sohi resigned from his role as President.
Current report
On June 11, 2025, the Company announced the following management team and Board of Directors changes: Lionel Conacher, current Board member, was appointed as Chairman of the Board; Adesh Vora, current Executive Chairman, remained on the Board and was appointed Chief Executive Officer; and Kent Cunningham, current Chief Executive Officer, assumed role as President.
Current report
On July 15, 2025, Kent Cunnigham, current President, was reappointed as Chief Executive Officer, and Adesh Vora, current Chief Executive Officer and Board member, was named Vice Chairman of the Board.
Current report
On August 12, 2025, the Company initiated restructuring proceedings for its SRx Canada subsidiaries under the CCAA. Refer to Note 23 – Subsequent events for more information.
Current report
On August 13, 2025, Adesh Vora resigned from his role as Vice Chairman and was no longer a shareholder nor Board member of the Company.
Current report
On August 14, 2025, the Company announced the cancellation of approximately 18.8 million shares of its fully diluted capital stock, of which majority were exchangeable shares of common stock. Refer to Note 23 – Subsequent events for more information.
Current report
Following the Amalgamation, all property, rights, obligations and liabilities of SRx will become those of the newly formed amalgamated entity (“Amalco”), which will operate as an indirect wholly owned subsidiary of Better Choice. The Arrangement Agreement was subsequently amended on December 6, 2024, January 24, 2025, and February 25, 2025.
Current report
Following the completion of the Amalgamation, Better Choice intends to continue operating its premium and super-premium pet product brands under the Halo brand, while SRx will continue to operate as a cornerstone of the Combined Company’s healthcare business. The Combined Company aims to become a leading global health and wellness platform, offering a portfolio of solutions designed to support better choices for both people and pets.
Current report
We generate revenue primarily through our specialty pharmacy operations, including the dispensing of high-cost prescription medications reimbursed by third-party payors. Revenue is recognized when control transfers to the customer, typically at the time a prescription is filled, or a service is rendered. Most transactions involve a single performance obligation. Reported net sales are reduced by trade promotions, discounts, and co-pay assistance programs, which are estimated and recorded as reductions to gross revenue. We also maintain a revenue reserve for expected product returns based on historical patterns. While specialty pharmacy remains our core revenue driver, we continue to expand into clinical services, diagnostics, and wholesale distribution, which are expected to contribute more meaningfully over time.
Current report
Net sales decreased by $76.0 million, or 65%, to $41.1 million for the nine months ended June 30, 2025, compared to $117.1 million for the nine months ended June 30, 2024. The decrease was primarily attributable to significant operational disruptions driven by liquidity constraints, which limited our ability to purchase and dispense high-cost specialty medications. As a result, patient volumes and prescription fulfillment rates declined across our specialty pharmacy and clinic operations. Additionally, staffing and service reductions at certain locations further constrained our ability to maintain historical levels of service delivery.
Current report
Cost of goods sold primarily includes the cost of pharmaceuticals and medical products purchased from manufacturers and suppliers, as well as associated packaging materials, inbound freight to our facilities, and third-party logistics expenses related to warehousing and fulfillment. We regularly evaluate inventory for obsolescence, expiration, or slow movement, and record inventory at the lower of cost or net realizable value. Any adjustments for impaired or unsellable inventory are recognized as a component of cost of goods sold.
Current report
Our gross profit has been and will continue to be influenced by several key factors, including the mix of products and services sold, sales volumes across our core business lines, and pricing strategies, the acquisition cost of pharmaceuticals and medical products, and freight and logistics expenses incurred from our warehouse to the pharmacy.
Current report
During the nine months ended June 30, 2025, gross profit decreased $13.1 million, or 56%, to $10.3 million compared to $23.4 million during the nine months ended June 30, 2024. The decrease in gross profit was primarily driven by the significant decline in net sales resulting from operational and liquidity challenges that limited access to inventory and reduced prescription volumes. Lower throughput and under-absorption of fixed costs across pharmacy and clinic operations also contributed to margin pressure during the period.
Current report
We continue to actively collaborate with our supply chain, distribution, and logistics partners to identify cost-saving opportunities and improve gross margins over time. However, we expect ongoing margin variability due to macroeconomic factors, including inflationary pressures on transportation, labor, and pharmaceutical sourcing costs. As market conditions evolve, we remain focused on refining our pricing strategy to respond effectively to cost fluctuations and maintain competitive positioning.
Current report
Impairment of long-lived intangible assets resulted in an impairment charge of $2.7 million for the three and nine months ended June 30, 2025, with no corresponding activity for the nine months ended June 30, 2024. See Note 8 – Intangible Assets for additional information.
Current report
Other income (expense), net
Current report
Other income improved by $4.4 million to $4.3 million for the nine months ended June 30, 2025, compared to an expense of $0.1 million for the nine months ended June 30, 2024. This improvement was primarily driven by a gain on the sale of assets at the SRx level during the current period. The gain resulted from the divestiture of certain retail locations and related assets as part of the Company’s strategy to optimize its asset base and strengthen liquidity.
Current report
Interest expense, net
Current report
During the nine months ended June 30, 2025, interest expense remained constant at $3.3 million compared to the fiscal nine months ended June 30, 2024. Interest expense for the nine months ended June 30, 2025 and 2024 is comprised of interest on our CWB term loan, CEBA loans, Macdonald DND loan, Meridian loan, and Arbinder Sohi loan, interest on finance leases. Interest expense in the current period was not materially impacted by the consolidation of Better Choice, and there were no significant changes in debt balances that affected expense year over year.
Current report
Our income tax expense (benefit) consists of estimated federal and provincial income taxes based on enacted Canadian tax rates, adjusted for allowable credits, deductions, and uncertain tax positions as they arise. For the nine months ended June 30, 2025, we recorded an income tax recovery of $0.63 million, compared to an expense of $0.45 million in 2024. The effective tax rate was (2.46%) for 2025 compared to (3.92%) in 2024, differing from the combined Canadian statutory rate of 26.5% primarily due to a significant increase in valuation allowances related to the uncertainty of realizing the benefit of net operating losses (NOLs). The Company has recognized deferred tax assets of approximately $37.5 million before valuation allowance, primarily related to net operating losses totaling approximately $136.8 million, which expire between 2037 and 2043. A valuation allowance of $37.1 million has been recorded against these deferred tax assets due to uncertainties regarding future taxable income sufficient to realize these benefits. Should the Company generate adequate taxable income in the future or identify viable tax planning strategies, a reversal of the valuation allowance could reduce future income tax expense.
Current report
There were no uncertain tax positions as of June 30, 2025 and 2024. The Company is subject to tax examinations primarily for the years 2020 through 2024 in Canada.
Current report
(a) Transaction-related expenses related to non-recurring business matters include legal and professional fees related to the Company’s Merger, private placement, and certain investor relations and capital markets activities directly tied to financing efforts.
Current report
(b) One-time and non-recurring expenses primarily related to restructuring and severance costs from corporate headcount reductions and executive transitions; costs associated with pharmacy and clinic closures; and historical accounts receivable write-offs and tax adjustments. These items have been excluded from Adjusted EBITDA as they are not reflective of the Company’s ongoing operations.
Current report
Cash used in operating activities was $15.7 million during the nine months ended June 30, 2025, compared to cash provided by operating activities of $0.6 million during the nine months ended June 30, 2024. The change was primarily driven by a higher net loss of $29.7 million in 2025 compared to $11.1 million in 2024, partially offset by non-cash adjustments including impairment expense, depreciation and amortization, gain on sale of assets, share-based compensation, and an income tax benefit. Working capital changes also contributed with decreases in trade receivables and inventory, and purchase of prepaid consulting services during the nine-month period ended June 30, 2025.
Current report
Cash provided by investing activities was $13.3 million during the nine months ended June 30, 2025, compared to cash used in investing activities of $4.5 million during the nine months ended June 30, 2024. Proceeds from the sale of assets as well as acquiring cash in the Merger contributed, offset by cryptocurrency investing activity. In 2024, investing activities were primarily attributable to acquisitions completed during the period.
Current report
Cash provided by financing activities was $3.2 million during the nine months ended June 30, 2025, compared to $3.8 million during the nine months ended June 30, 2024. The increase is primarily attributable to the proceeds from private placements done prior to and at the Merger closing, offset by paydowns of its senior secured facilities. During the nine months ended June 30, 2024, proceeds were received related to short-term and long-term debt facilities, offset by repayment of borrowings and lease liabilities.
Current report
CWB Facility
Current report
As of June 30, 2025, the Company maintained senior secured term loan facilities with CWB Financial Group (“CWB”) totaling $23.1 million, which were originally entered into to support the development and acquisition of select pharmacy locations. On September 18, 2023, SRx Health Solutions Inc. refinanced its existing term facilities under a new consolidated agreement with CWB, which imposed updated financial covenants. These include maintaining a Senior Funded Debt to Adjusted EBITDA ratio of less than 4.0x and a Fixed Charge Coverage Ratio greater than 1.0x.
Current report
As at both June 30, 2025 and 2024, the Company was not in compliance with the CWB loan covenants, and as a result, the full amount of the CWB loans has been classified as a current liability. The debt remains callable at the lender’s discretion due to this non-compliance. Interest rates on the outstanding CWB loans range from 8.67% to 9.21%, with maturity dates extending through late 2027.
Current report
The lack of compliance is being actively managed, and the Company is in ongoing discussions with CWB to explore potential solutions. However, there can be no assurance that the Company will be able to renegotiate terms or cure the default in the near term.
Removed paragraphs (46)
Previous report
Better Choice is a pet health and wellness company committed to leading the industry shift toward pet products and services that help dogs and cats live healthier, happier and longer lives. Our mission is to become the most innovative premium pet food company in the world, and we are motivated by our commitment to making products with integrity and treating pets and their parents with respect. We believe that our broad portfolio of pet health and wellness products are well positioned to benefit from the trends of growing pet humanization and an increased consumer focus on health and wellness, and have adopted a laser focused, channel specific approach to growth that is driven by new product innovation.
Previous report
We sell our premium and super-premium products (which we believe generally includes products with a retail price greater than $0.20 per ounce) under the Halo brand umbrella, including Halo Holistic™, Halo Elevate® and the former TruDog brand, which was rebranded and successfully integrated under the Halo brand umbrella during the third quarter of 2022. Our core products sold under the Halo brand are made with high-quality, thoughtfully sourced ingredients for natural, science based nutrition. Each innovative recipe is formulated with leading veterinary and nutrition experts to deliver optimal health. Our diverse and established customer base has enabled us to penetrate multiple channels of trade, which we believe enables us to deliver on core consumer needs and serve pet parents wherever they shop. We group these channels of trade into three distinct categories: Digital, which includes the sale of product to online retailers such as Amazon and Chewy, as well as DTC which included the sale of product through the Company’s website, halopets.com, through June 1, 2024; International, which includes the sale of product to foreign distribution partners and to select international retailers; and Brick & Mortar, which primarily includes the sale of product to pet specialty retailers, independent pet stores, and regional distributors.
Previous report
A concerted effort to drive brand awareness behind distinctive positioning and messaging is the cornerstone of our growth plan, supported by innovation. Halo’s future growth is driven through an extensive brand positioning workstream executed over the last year. New consumer messaging will build awareness with pet parents, persuade them that Halo is the right choice for their pet, and move the consumer towards purchase. The creative campaign will be brought to life on Amazon and Chewy platforms as well as outside those platforms. By shifting media investment from bottom-of-funnel-driven DTC activities to full funnel activation across the Amazon and Chewy platforms, Halo will see improvements in both media effectiveness, efficiency, and reach.
Previous report
In addition to incremental consumer media activation, innovation plays a key role in Halo’s growth plans, supported by our own research and development, and acquisitions. Our established supply and distribution infrastructure allows us to bring new products to market in less than a year. Our outsourced manufacturing model is flexible, scalable and encourages innovation allowing us to offer a breadth of assortment in dog and cat food main meal as well as pet treat products under the Halo brand, serving a wide variety of consumer needs, dayparts, and occasions.
Previous report
The Halo portfolio offers a variety of platforms through which to innovate. Halo Holistic™ is designed for the pet parent seeking complete digestive health with prebiotics, probiotics and postbiotics. Additionally, it’s one of the only brands made with only whole animal proteins and no meat meals. Halo Elevate®, features leading nutrient levels supporting the top five pet parent health concerns including digestive health, heart and immunity support, healthy skin and coat, hip and joint support and strength and energy. Halo Freeze Dried Raw recipes preserve the natural flavor and nutrition of raw food with 100% protein from natural sources.
Previous report
The Global Pet Food and Treat Market
Previous report
The U.S. represents the largest and most developed market for pet food globally, with food and treats accounting for approximately $64 billion of total spend in the pet care market in 2024. According to the American Pet Product Association (“APPA”), approximately 63% of all households in the U.S. own a pet, equating to a 180 million adult consumers living in a household with a pet. Pet spending represents a significant portion of household spend on consumer products, as this translates to an average annual spend on pet products of more than $738 in 2024, which represents a 7.4% increase over the previous year.
Previous report
US retail sales of dog and cat food reached $65.8 billion in 2024, up 2.1% over 2023. This increase represents a significant slow-down in pet food growth, following four consecutive years of double-digit increases and a 2018-2023 compound annual growth rate (CAGR) of 13.0%. While much of the pre-pandemic growth in the pet food market can be attributed to continued premiumization and pet population growth among higher-income households, price inflation was almost entirely behind more recent growth, specifically in 2022 and early 2023. These gains were especially impressive given a simultaneous decline in the dog population. Pet food has proven itself to be amazingly resilient in both this and previous economic crises, and pet food’s position as a non-discretionary item has spared it many of the cutbacks seen in the non-food pet supplies sector.
Previous report
Due to its ready access and “contactless” advantages, e-commerce saw a huge boost from the pandemic and continued to make inroads into brick-and-mortar’s share of the market in the following years. Packaged Facts expects the channel to continue bleeding share away from others at a somewhat slower pace in the years to come, with the ongoing, intensive, competitive pushes of Amazon.com driving the momentum. Appeals continue to be the convenience of having large bags of pet food home delivered, the “endless aisles” and product comparison benefits of online shopping, the movement toward fresh pet food sold online, and online shopping in general.
Previous report
In Packaged Facts’ January 2024 survey, pet food was cited as an important pet health and wellness product by the largest share of pet owners—80% of dog owners and 82% of cat owners. By comparison, 50% and 49%, respectively, view pet treats as an important pet health product. Pet parents are on the lookout for products that improve their pet’s health and wellness, with 79% liking the idea of healthier pet snacks and treats and 73% viewing high-quality pet foods as effective for preventive healthcare. Pet owners are also willing to spend more on pet foods with extra health and wellness benefits, and this attitude appears to be growing, with 74% agreeing with this sentiment in Packaged Facts July-August 2024 survey, up from 66% in the September-October 2023 survey.
Previous report
Packaged Facts projects moderate (in relation to the past four years) but steady pet food performance through 2028, with the sales to experience a compound annual growth rate (CAGR) of 4.4% for the 2023-2028 period. This increase reflects a 4.3% increase for dog food and 4.6% increase in cat food. Although the days of double-digit increases will likely remain in the past, given the mature nature of the pet food market, should the dog population rebound more quickly than anticipated, this growth could reach beyond 5% or even 6%.
Previous report
From a demographic perspective, younger pet owners are more likely to spend a higher percentage of their income on pets, treat their pet as an important member of the family and to purchase products from pet specialty and online retailers rather than from grocery stores. Along these lines, women are more interested in purchasing pet food than men, and are more likely to engage with search ads than men. Taken holistically, these traits suggest a preference to purchase more premium and super-premium pet food and treats from brands like Halo, with a tendency to purchase products in the channels where we compete.
Previous report
Globally, Asia is the second largest market for pet products, with China representing the largest market opportunity for growth. Like the U.S., growth in the Asian pet care industry has been driven by dramatic increases in household pet ownership. The global plant-based pet food market is set to expand its roots in the global market at a promising CAGR of 9.2%, while the market is anticipated to hold a revenue of USD $57.43 billion in 2032. We believe that growth in Asia is fueled by increasing levels of economic financial status and demand for premium, western manufactured products as a result of product quality concerns. This demand has been supported by a rapidly growing middle class in China, where a McKinsey report estimated that in 2018 roughly 730 million people in urban areas fell into the income categories of “aspirants” and “affluents,” with the Brookings group estimating that approximately 60 million people are added to these income categories each year. We believe that this growth drove the increase in the number of dog-owning Chinese households as measured by Euromonitor, which increased from 12% in 2015 to 22% in 2023, according to one 2024 study. According to Euromonitor, the Chinese market for premium dry dog and cat food is anticipated to grow at a 20% CAGR and 28% CAGR, respectively, from 2015 through 2025, suggesting that the Chinese pet market has significant room for growth in the foreseeable future.
Previous report
Our Growth Strategy
Previous report
In December 2023, the Company made a strategic exit out of Petco stores (while remaining on Petco.com), and Pet Supplies Plus. As of June 1, 2024, the Company has exited its DTC channel, in an effort to improve profitability. On March 25, 2024, Better Choice Company, Inc. (“BTTR”) initiated a legal action to enforce a right of first refusal (“ROFR”) option exercised by Alphia, Inc. (“Alphia”), which is controlled by a Paris-based private equity firm, PAI Partners. On June 20, 2024, the Company agreed to settlement terms of the lawsuit. The agreement dismisses the Company’s ongoing litigation with Alphia and provides for the forgiveness of the Company’s term loan, including $5.0 million in principal and $0.5 million of payable-in-kind (“PIK”) accrued interest, the termination of 335,640 warrants with a strike price of $11.44 per share that were set to expire in 2028, and the forgiveness of up to $2.6 million in accounts payable due to Alphia, provided the remaining outstanding accounts payable balance is paid within 90 days of the settlement date. These accounts payable were paid and settled prior to December 31, 2024, resulting in a gain of $2.6 million.
Previous report
The Company was not in compliance with certain covenants related to the Alphia Term Loan Facility as of December 31, 2023 and the debt was callable by the lender. In connection with the Alphia settlement noted above, the Company was no longer subject to Alphia-related covenants as of December 31, 2024.
Previous report
On April 15, 2024, the Company’s board of directors authorized and approved a stock repurchase plan (the “Repurchase Plan”) for up to $5 million of the currently outstanding shares of the Company’s common stock through December 31, 2024. Under the Repurchase Plan, the Company is authorized to repurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act. The Board also authorized the Company to enter into written trading plans under Rule 10b5-1 of the Exchange Act. Adopting a trading plan that satisfies the conditions of Rule 10b5-1 would allow a company to repurchase its shares at times when it might otherwise be prevented from doing so due to self-imposed trading blackout periods or pursuant to insider trading laws. Under any Rule 10b5-1 trading plan, the Company’s third-party broker, subject to Securities and Exchange Commission regulations regarding certain price, market, volume and timing constraints, would have authority to purchase the Company’s common stock in accordance with the terms of the plan. The Company may from time to time enter into Rule 10b5-1 trading plans to facilitate the repurchase of its common stock pursuant to its Repurchase Plan. The Company has purchased 102,597 shares of common stock under the Repurchase Plan, during the year ended December 31, 2024.
Previous report
On April 24, 2024, the Company received a notice of noncompliance from the NYSE American. On May 24, 2024, we submitted a plan of compliance to NYSE American addressing how we intend to regain compliance. The plan has been accepted by the NYSE American. However, if we are not in compliance with the continued listing standards before the cure period ends on October 24, 2025, or if we do not make progress consistent with the plan, the NYSE American may take steps to delist our common stock. Further, we received correspondence from the NYSE American on July 9, 2024, indicating noncompliance under a different requirement of the listing standards, since we reported stockholders’ equity of $1.1 million as of March 31, 2024, and had losses from continuing operations and/or net losses in three out of its four most recent fiscal years ended December 31, 2023, and that which requires us to maintain a minimum stockholders’ equity of $4.0 million. We will need to take additional steps to regain compliance under this requirement as well, or the NYSE American may take steps to delist our common stock.
Previous report
SRx Health operates one of the largest specialty pharmacy networks in Canada with specialty pharmacies, specialty health/infusion clinics, clinical trial sites and wholesale distribution facilities spanning the region. SRx Health is only one of a few specialty pharma operators in Canada with a network that extends across Canada, making it one of the most accessible providers of specialty healthcare in the country. Better Choice will continue to operate its portfolio of established premium and super-premium pet products under the Halo brand.
Previous report
We sell our products through online retailers, pet specialty and independent pet retailers and distributors, internationally to foreign distribution partners (transacted in U.S. dollars), and our website directly to consumers. We offer a variety of trade promotions, discounts and incentives to our customers, which impacts the transaction price of our products and our net sales accordingly. DTC net sales within the Digital channel includes revenue derived from shipping fees and are net of loyalty points earned (a portion of revenue is deferred at the time of the sale as points are earned and not recognized until the redemption of the points, estimated based on historical experience). We record a revenue reserve based on historical return rates to account for customer returns.
Previous report
Net sales decreased $(0.7) million, or (9)%, to $7.2 million for the three months ended March 31, 2025 compared to $7.9 million for the three months ended March 31, 2024. The decrease in net sales for the three months ended March 31, 2025 is primarily attributable to the shutdown of the DTC revenue stream in the second quarter of 2024.
Previous report
Key factors that we expect to affect our future sales growth include new product innovation and launches, our expansion strategy in each of the sales channels and our key supplier relationships.
Previous report
Cost of goods sold consists primarily of the cost of product obtained from co-manufacturers, packaging materials, freight costs for shipping inventory to the warehouse, as well as third-party warehouse and order fulfillment costs. We review inventory on hand periodically to identify damaged, slow-moving inventory, and/or aged inventory. Based on this analysis, we record inventories at the lower of cost or net realizable value, with any reduction in value expensed as cost of goods sold.
Previous report
Our products are manufactured to our specifications by our co-manufacturers using raw materials. We work with our co-manufacturers to secure a supply of raw materials that meet our specifications. In addition to procuring raw materials that meet our formulation requirements, our co-manufacturers manufacture, test and package our products. We design our packaging for our co-manufacturers and the packaging is shipped directly to them.
Previous report
Our gross profit has been and will continue to be affected by a variety of factors, primarily product sales mix, volumes sold, discounts offered to newly acquired and recurring customers, the cost of our manufactured products, and the cost of freight from the manufacturer to the warehouse.
Previous report
During the three months ended March 31, 2025, gross profit decreased $(0.2) million, or (9)%, to $2.4 million compared to $2.6 million during the three months ended March 31, 2024.
Previous report
Gross margin stayed consistent at 33% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. We continue to actively work with our co-manufacturing and freight partners to generate future cost savings and realize improved gross margins in future periods. We could see continued margin variability due to the current economic environment and pricing pressures due to inflationary costs for both transportation and raw materials. We will continue to refine and optimize our overall pricing strategy as we evaluate the future impact of inflation and align ourselves with the market.
Previous report
Interest income (expense), net
Previous report
During the three months ended March 31, 2025, we had interest income of $0.1 million, compared to interest expense of $0.4 million for the three months ended March 31, 2024. Interest income for the three months ended March 31, 2025 is attributable to interest on the SRx note receivable. Interest expense for the three months ended March 31, 2024 is comprised of interest on our Wintrust Receivables Credit Facility, Alphia Term Loan, the amortization of debt issuance costs, and interest accretion on the Alphia Term Loan. The decrease in interest expense for the three months ended March 31, 2025 is related to the forgiveness of the Alphia Term Loan, as discussed in Note 8 - Debt.
Previous report
Our income tax provision consists of an estimate of federal and state income taxes based on enacted federal and state tax rates, as adjusted for any allowable credits, deductions and uncertain tax positions as they arise. During the three months ended March 31, 2025, we recorded income tax expense of less than $0.01 million, which relates to state income tax expense. During the three months ended March 31, 2024 we recorded income tax expense of less than $0.1 million, which related to indefinite-lived assets. The effective tax rate for the three months ended March 31, 2025 was less than 1%, which differs from the U.S. Federal statutory rate of 21% primarily because our losses have been fully offset by a valuation allowance due to uncertainty of realizing the tax benefit of NOLs.
Previous report
(a) Non-cash expenses related to equity compensation awards. Share-based compensation is an important part of the Company’s compensation strategy and without our equity compensation plans, it is probable that salaries and other compensation related costs would be higher.
Previous report
(b) Transaction-related legal fees and professional fees related to single occurrence business matters.
Previous report
(c) Single occurrence expenses related to marketing agency and design, strategic re-branding initiatives, Elevate® launch, product innovation and reformulations.
Previous report
(d) Other single occurrence expenses such as legal settlements, employee severance, executive recruitment, transition of our dry kibble co-manufacturing supplier, and other non-recurring fees.
Previous report
Cash used in operating activities decreased by $1.4 million, or 138%, to cash provided by operating activities during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase in cash was primarily driven by significant fluctuations in our working capital, including a comparative increase in accounts payable of $0.8 million and a decrease to accounts receivable of $0.5 million. These increases in cash used were partially offset by a decrease in net loss of $1.9 million, or 66%, to $(1.0) million for the three months ended March 31, 2025.
Previous report
Cash used in investing activities was $1.1 million during the three months ended March 31, 2025. The cash used in investing activities related to the issuance of a $1.1 million note receivable, there were also capital expenditures of less than $0.1 million. Cash used in investing activities was less than $0.1 million during the three months ended March 31, 2024. The cash used in investing activities is related to capital expenditures.
Previous report
Cash used in financing activities was $(1.2) million, during the three months ended March 31, 2025 and cash provided by financing activities was $0.4 million during the three months ended March 31, 2024. The cash used in financing activities for the three months ended March 31, 2025 was related to proceeds from the Wintrust revolving line of credit of $2.2 million, offset by payments on the Wintrust revolving line of credit of $(3.4) million. The cash used in financing activities for the three months ended March 31, 2024 was related to proceeds from the Wintrust revolving line of credit of $3.0 million, offset by payments on the Wintrust revolving line of credit of $(2.6) million.
Previous report
Wintrust Receivables Credit Facility
Previous report
On June 21, 2023, the Company entered into an account purchase agreement with Wintrust Receivables Finance, a division of Wintrust Bank N.A. (“Wintrust”) pursuant to which Wintrust will purchase, at its discretion, eligible customer invoices and advance up to 70% of the face amount of all purchased amounts up to $4,750,000. Each advance under the AP Agreement will bear interest at the U.S. prime rate, plus 2.5%. The AP Agreement has an initial term of two years and will automatically renew annually unless terminated by the Company on at least 60 days’ notice. The Wintrust Receivables Credit Facility is secured by a general security interest in the assets of the Company. The Wintrust Receivables Credit Facility is guaranteed secured by the Company pursuant to that certain Unlimited Continuing Guaranty Agreement dated as of June 21, 2023.
Previous report
As of March 31, 2025, the balance outstanding on the Wintrust Receivables Credit Facility amounted to $1.2 million.
Showing the first 40 of 46 passages. Open the source sections for the rest.
Reworded paragraphs (13)
Previous wording
References in this report (the “Quarterly Report”) to “we,” “us,” the “Company” or “BCC” refer to Better Choice Company, Inc. prior to the consummation of the Business Combination and to SRx Health Solutions, Inc. as of and following the consummation of the Business Combination. The following discussion includes forward-looking statements about our business, financial condition and results of operations, including discussions about management’s expectations for our business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and in light of recent events and trends, and you should not construe these statements either as assurances of performance or as promises of a given course of action. Instead, various known and unknown factors are likely to cause our actual performance and management’s actions to vary, and the results of these variances may be both material and adverse. A description of material factors known to us that may cause our results to vary or may cause management to deviate from its current plans and expectations, is set forth under “Risk Factors.” See “Cautionary Note Regarding Forward-Looking Statements.” The following discussion should also be read in conjunction with our audited consolidated financial statements including the notes thereto appearing elsewhere in this filing. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Current wording
The following discussion includes forward-looking statements about our business, financial condition and results of operations, including discussions about management’s expectations for our business. The financial condition, results of operations and cash flows discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are those of SRx Health Solutions Inc. and its consolidated subsidiaries, collectively, the “Company,” “SRx,” “we,” “our,” or “us”. These statements represent projections, beliefs and expectations based on current circumstances and conditions and in light of recent events and trends, and you should not construe these statements either as assurances of performance or as promises of a given course of action. Instead, various known and unknown factors are likely to cause our actual performance and management’s actions to vary, and the results of these variances may be both material and adverse. A description of material factors known to us that may cause our results to vary or may cause management to deviate from its current plans and expectations, is set forth under “Risk Factors.” See “Cautionary Note Regarding Forward-Looking Statements.” The following discussion should also be read in conjunction with our audited consolidated financial statements including the notes thereto appearing elsewhere in this filing. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Previous wording
On September 3, 2024, the Company announced it entered into an Arrangement Agreement (the “Arrangement Agreement”) with SRx Health Solutions, Inc., a corporation organized under the laws of the Province of Ontario (“SRx” or “SRx Health”), 1000994476 Ontario Inc., an indirect wholly-owned subsidiary of the Company and a corporation existing under the laws of the Province of Ontario (“AcquireCo”), and 1000994085 Ontario Inc., a direct wholly-owned subsidiary of the Company and corporation existing under the laws of the Province of Ontario (“CallCo”). Pursuant to the Arrangement Agreement, and the Plan of Arrangement adopted in connection therewith, the Company will acquire SRx in an all-stock transaction pursuant to a statutory amalgamation of SRx and AcquireCo under Canadian law (the “Amalgamation”). As a result of the Amalgamation, all of the property, rights, interests and obligations of SRx shall become the property, rights, interests and obligations of the resulting entity (“Amalco”), and Amalco will be an indirect wholly-owned subsidiary of the Company. The Arrangement Agreement was amended on December 6, 2024, and the Arrangement Agreement and Plan of Arrangement were each amended on January 24, 2025 and February 25, 2025.
Current wording
On September 3, 2024, SRx Health Solutions Inc. (“SRx”), a corporation organized under the laws of the Province of Ontario, announced that it had entered into an arrangement agreement (the “Arrangement Agreement”) with Better Choice Company Inc. (“Better Choice”), a publicly listed company on the NYSE American, along with 1000994476 Ontario Inc. (“AcquireCo”), an indirect wholly-owned subsidiary of Better Choice, and 1000994085 Ontario Inc. (“CallCo”), a direct wholly-owned subsidiary of Better Choice, both existing under the laws of the Province of Ontario. Pursuant to the Arrangement Agreement and the related Plan of Arrangement, SRx will be acquired by Better Choice in an all-stock transaction through a statutory amalgamation under Canadian law between SRx and AcquireCo (the “Amalgamation”).
Previous wording
In the Amalgamation, each issued and outstanding common share of SRx will be converted based on the Exchange Ratio (as defined below) into shares of common stock of the Company (“BTTR Common Stock”) or, at the option of the holder thereof, exchangeable shares of Amalco that will be exchangeable at the option of the holder (or under certain other circumstances) on a one-for-one basis for shares of BTTR Common Stock. The Exchange Ratio will be determined five business days prior to the consummation of the Amalgamation (the “Closing”) and will be based on the trailing 30-day volume weighed average price of the Better Choice Common Stock on the NYSE America, subject to an aggregate share collar of 19,750,000 shares and 30,000,000 shares, with any resulting fractional shares to be rounded to the nearest whole share (the “Exchange Ratio”). The Amalgamation assigns an equity value of SRx of U.S. $80 million, assuming net debt at Closing of U.S. $43 million (which will be subject to a two-way adjustment prior to the Closing). All outstanding warrants and restricted stock units of SRx will be converted into common shares of SRx or terminated prior to the Closing.
Current wording
Under the terms of the Amalgamation, each issued and outstanding common share of SRx will be converted, based on a defined exchange ratio (the “Exchange Ratio”), into either shares of common stock of Better Choice (“BTTR Common Stock”) or, at the election of the holder, exchangeable shares of Amalco. These exchangeable shares will be convertible on a one-for-one basis into BTTR Common Stock. The Exchange Ratio will be calculated five business days prior to closing, based on the trailing 30-day volume-weighted average price of BTTR Common Stock on the NYSE American, subject to an aggregate collar of 19,750,000 to 30,000,000 shares. The Amalgamation reflects an assigned equity value of SRx of USD $80 million, assuming net debt at closing of USD $43 million, subject to a two-way adjustment. All outstanding SRx warrants and restricted stock units will be settled or terminated prior to closing.
Previous wording
The transaction has been unanimously approved by the boards of directors of the Company and SRx. The transaction was approved by the stockholders of the Company at a special meeting on March 21, 2025 and by the SRx shareholders at a shareholder meeting on February 26, 2025. The merger closed on April 25, 2025.
Current wording
The transaction was unanimously approved by the boards of directors of both SRx and Better Choice. The shareholders of SRx approved the Amalgamation at a meeting held on February 26, 2025, and Better Choice shareholders approved the transaction at a special meeting on March 21, 2025. The transaction closed on April 24, 2025 and the Company began trading under its new legal name and ticker on April 30, 2025.
Previous wording
Results of Operations for the three months ended March 31, 2025 and 2024
Current wording
Results of Operations for the nine months ended June 30, 2025 and 2024
Previous wording
The following table sets forth our consolidated results for the periods presented (in thousands):
Current wording
The following table sets forth our condensed consolidated results for the periods presented (in thousands):
Previous wording
Historically, we have financed our operations primarily through the sales of shares of our common stock, warrants, preferred stock, and loans. In connection with our July 2024 public offering, we issued and sold 739,000 shares of common stock at a public offering price of $3.00 per share and pre-funded warrants to issue 1,028,000 shares of Common Stock at a public offering price of $2.99 per Pre-Funded Warrant. On March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $1.1 million and $3.1 million, respectively.
Current wording
Historically, we have financed our operations primarily through debt financing. On June 30, 2025 and June 30, 2024, we had cash and cash equivalents of $0.9 million and $0.1 million, respectively.
Previous wording
We are subject to risks common in the pet wellness consumer market including, but not limited to, dependence on key personnel, competitive forces, successful marketing and sale of our products, the successful protection of our proprietary technologies, ability to grow into new markets, and compliance with government regulations. As of March 31, 2025, we have not experienced a significant adverse impact to our business, financial condition or cash flows resulting from geopolitical actions or threat of cyber-attacks. However, we have seen adverse impacts to our gross margin from time to time due to inflationary pressures in the current economic environment. Uncertainties regarding the continued economic impact of inflationary pressures, geopolitical actions and threat of cyber-attacks are likely to result in sustained market turmoil, which could negatively impact our business, financial condition, and cash flows in the future.
Current wording
We are subject to risks common in the healthcare and pharmacy services industry, including, but not limited to, our dependence on key personnel, intense competition, our ability to effectively market and scale our service offerings, the protection and enforcement of proprietary technology and data systems, expansion into new markets or service lines, and compliance with complex and evolving healthcare, data privacy, and pharmaceutical regulations. As of June 30, 2025, we have not experienced a significant adverse impact to our business, financial condition or cash flows resulting from geopolitical actions or threat of cyber-attacks. However, we have seen adverse impacts to our gross margin from time to time due to inflationary pressures in the current economic environment. Uncertainties regarding the continued economic impact of inflationary pressures, geopolitical actions and threat of cyber-attacks are likely to result in sustained market turmoil, which could negatively impact our business, financial condition, and cash flows in the future.
Previous wording
We have historically incurred losses and expect to continue to generate operating losses and consume cash resources in the near term. These conditions raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the date these consolidated financial statements are issued, meaning that we may be unable to generate sufficient operating cash flows to pay our short-term obligations. We have implemented and continue to implement plans to achieve operating profitability, including various margin improvement initiatives, the consolidation of and introduction of new co-manufacturers, the optimization of our pricing strategy and ingredient profiles, and new product innovation.
Current wording
We have historically incurred losses and expect to continue to generate operating losses and consume cash resources in the near term. These conditions raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the date these condensed consolidated financial statements are issued, meaning that we may be unable to generate sufficient operating cash flows to pay our short-term obligations. We have implemented and continue to implement plans to achieve operating profitability, including various margin improvement initiatives, the consolidation of and introduction of new co-manufacturers, the optimization of our pricing strategy and ingredient profiles, and new product innovation.
Previous wording
Our ability to raise additional capital may be adversely impacted by the potential worsening of global economic conditions, including inflationary pressures, the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from geopolitical tensions. If we seek additional financing to fund our business activities in the future and there remains doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all. If we are unable to raise the necessary funds when needed or achieve planned cost savings, or other strategic objectives are not achieved, we may not be able to continue our operations, or we could be required to modify our operations that could slow future growth.
Current wording
Our ability to raise additional capital may be adversely impacted by the potential worsening of global economic conditions, including inflationary pressures, the recent disruptions to, and volatility in, the credit and financial markets in the United States, Canada, and worldwide resulting from geopolitical tensions. If we seek additional financing to fund our business activities in the future and there remains doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all. If we are unable to raise the necessary funds when needed or achieve planned cost savings, or other strategic objectives are not achieved, we may not be able to continue our operations, or we could be required to modify our operations that could slow future growth.
Previous wording
We are contractually obligated to make future cash payments for various items, including debt arrangements, certain purchase obligations, as well as the lease arrangement for our office. See “Note 8 - Debt” to our interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information about our debt obligations. Our purchase obligations include certain ongoing marketing projects, software subscriptions as well as in-transit or in-production purchase orders with our suppliers, for which amounts vary depending on the purchasing cycle. The majority of our software subscriptions are not under long-term contracts, and we do not have long-term contracts or commitments with any of our suppliers beyond active purchase orders. These purchase obligations were not material as of the date of this Quarterly Report on Form 10-Q.
Current wording
We are contractually obligated to make future cash payments for various items, including debt arrangements, certain purchase obligations, as well as the lease arrangement for our office. See “Note 12 – Debt” to our audited consolidated financial statements included in this Annual Report on Form 10-K for more information about our debt obligations. Our purchase obligations include certain ongoing marketing projects, software subscriptions as well as in-transit or in-production purchase orders with our suppliers, for which amounts vary depending on the purchasing cycle. The majority of our software subscriptions are not under long-term contracts, and we do not have long-term contracts or commitments with any of our suppliers beyond active purchase orders. These purchase obligations were not material as of the date of this Annual Report on Form 10-K.
Previous wording
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our unaudited condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities, net sales, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described in our Annual Report for the year ended December 31, 2024 have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting estimates. Accordingly, we evaluate our estimates and assumptions on an ongoing basis, especially in light of recent economic volatility, and may adjust projections if market conditions change. Our actual results may differ from these estimates under different assumptions and conditions. There have been no material changes to our critical accounting estimates compared to the descriptions in our Annual Report for the year ended December 31, 2024.
Current wording
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities, net sales, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting estimates. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. See “Note 1 - Nature of business and summary of significant accounting policies” to our audited consolidated financial statements included in this Annual Report on Form 10-K for a description of our significant accounting policies.
Previous wording
The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model, which requires the development of input assumptions, as described in “Note 12 - Share-based compensation” of the Company’s Annual Form 10-K. Determining the appropriate fair value model and calculating the fair value of share-based payment awards requires the input of the subjective assumptions described in “Note 12 - Share-based compensation” of the Company’s Annual Form 10-K. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment.
Current wording
The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model, which requires the development of input assumptions, as described in “Note 19 - Share-based compensation”. Determining the appropriate fair value model and calculating the fair value of share-based payment awards requires the input of the subjective assumptions described in “Note 19 - Share-based compensation”. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. See “Note 19 - Share-based compensation” to our audited consolidated financial statements included in this Annual Report on Form 10-K for more information.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.