PetMed Express, Inc.: PetMeds Announces Third Quarter Fiscal 2025 Financial Results

DELRAY BEACH, Fla., Feb. 10, 2025 (GLOBE NEWSWIRE) -- PetMed Express, Inc. dba PetMeds and parent company of PetCareRx (NASDAQ: PETS) today announced its financial results for its third quarter ended December 31, 2024.

Third Quarter Fiscal 2025 Financial Highlights

• Net sales of $53.0 million.

• Gross margin rate of 28.1%, an increase of 80 basis points compared to the prior year period.

• Adjusted EBITDA of $2.0 million compared to Adjusted EBITDA of $0.9 million in the prior year period.

• Continued progress on key initiatives supporting the transformation of the business.
  

"In just nine months, we have made significant strides in our transformation journey, and I am pleased to report that we have delivered meaningful progress across our strategic priorities. Our focused execution is already yielding results, validating our direction and setting the foundation for long-term success. For the third quarter, we achieved $2 million in Adjusted EBITDA, a $1.1 million improvement year-over-year, while successfully reducing G&A expenses by $2.6 million compared to last year. As we continue to build a stronger, more efficient organization, our commitment remains unwavering-to drive differentiation, sustainable growth, and increased shareholder value through operational excellence and financial discipline," said Sandra Campos, CEO & President.

This afternoon the Company will host a conference call to review the quarter's financial results.

Time: 4:30 P.M. Eastern Time, February 10, 2025

Public call dial in [phone] (toll free) or [phone].

Webcast stream link: https://investors.petmeds.com for those who wish to stream the call via webcast.

Replay: Available until February 24, 2025, at 11:59 P.M Eastern Time.

To access the replay, call [phone] (toll free) or [phone] and enter passcode 13750886.

About PetMed Express, Inc.

Founded in 1996, PetMeds is a leader in the consumer pet healthcare sector. As a national online retailer with expert pharmacists and licenses across fifty states, PetMeds.com and PetCareRx.com deliver top branded pharmaceuticals, generics, compounded prescription medications and OTC supplements and vitamins that help pets live longer, healthier lives. Leveraging telehealth and insurance partnerships, they offer unparalleled value and convenience that enhance wellness and longevity for dogs, cats, and horses. PetMeds and PetCareRx provides essential pet health offerings through their websites, www.PetMeds.com and www.PetCareRx.com.

Forward Looking Statement

This press release may contain "forward-looking statements", within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and uncertainties, including the Company's ability to meet the objectives included in its business plan. Important factors that could cause results to differ materially from those indicated by such forward-looking statements are set forth in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in the Company's Annual Report on Form 10-K for the year ended March 31, 2024. The Company's future results may also be impacted by other risk factors listed from time to time in the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and periodic filings on Form 8-K. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release and should not be relied upon as representing the Company's views as of any subsequent date. The Company explicitly disclaims any obligation to update any forward-looking statements, other than as may be required by law. If the Company does update one or more forward-looking statements, no inference should be made that the Company will make additional updates with respect to those or other forward-looking statements.

PETMEDS INVESTOR RELATIONS CONTACT
ICR, LLC
John Mills
[phone]

Reed Anderson
[phone]
[e-mail]

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
		December 31, 2024				March 31, 2024
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	50,101			$	55,296
Accounts receivable, less allowance for credit losses of $88 and $273, respectively			2,259				3,283
Inventories, net			11,795				28,556
Prepaid expenses and other current assets			3,888				6,325
Prepaid income taxes			340				188
Total current assets			68,383				93,648
Noncurrent assets:
Property and equipment, net			28,425				26,657
Intangible and other assets, net			15,035				16,503
Goodwill			26,658				26,658
Operating lease right-of-use assets			1,077				1,432
Deferred tax assets, net			5,217				4,986
Total noncurrent assets			76,412				76,236
Total assets		$	144,795			$	169,884
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	10,945			$	37,024
Sales tax payable			24,483				25,012
Accrued expenses and other current liabilities			10,922				7,060
Current operating lease liabilities			453				459
Deferred revenue			1,156				2,603
Total current liabilities			47,959				72,158
Operating lease liabilities, net of current lease liabilities			652				995
Total liabilities			48,611				73,153
Commitments and contingencies (Note 7)
Shareholders' equity:
Preferred stock, $.001 par value, 5,100,000 shares authorized; 2,500 convertible shares issued and outstanding with a liquidation preference of $4 per share			9				9
Common stock, $.001 par value, 40,000,000 shares authorized; 20,656,457 and 21,148,692 shares issued and outstanding, respectively			21				21
Additional paid-in capital			17,967				25,146
Retained earnings			78,187				71,555
Total shareholders' equity			96,184				96,731
Total liabilities and shareholders' equity		$	144,795			$	169,884

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share amounts) (Unaudited)
		Three Months Ended December 31,								Nine Months Ended December 31,
			2024				2023				2024				2023
Net sales		$	52,984			$	65,317			$	180,506			$	214,560
Cost of sales			38,075				47,434				130,315				154,089
Gross profit			14,909				17,883				50,191				60,471
Operating expenses:
General and administrative			10,786				13,425				26,153				41,098
Advertising			2,987				5,762				14,583				18,539
Depreciation and amortization			1,586				1,770				4,965				5,161
Total operating expenses			15,359				20,957				45,701				64,798
(Loss) income from operations			(450	)			(3,074	)			4,490				(4,327	)
Other income:
Interest income, net			28				136				308				481
Other, net			180				293				597				1,053
Total other income			208				429				905				1,534
(Loss) income before provision (benefit) for income taxes			(242	)			(2,645	)			5,395				(2,793	)
Provision (benefit) for income taxes			465				(618	)			22				(345	)
Net (loss) income		$	(707	)		$	(2,027	)		$	5,373			$	(2,448	)
Net (loss) income per common share:
Basic		$	(0.03	)		$	(0.10	)		$	0.26			$	(0.12	)
Diluted		$	(0.03	)		$	(0.10	)		$	0.26			$	(0.12	)
Weighted average number of common shares outstanding:
Basic			20,634,651				20,425,282				20,581,913				20,380,262
Diluted			20,634,651				20,425,282				20,987,260				20,380,262
Cash dividends declared per common share		$	-			$	-			$	-			$	0.60

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
		Nine Months Ended December 31,
			2024				2023
Cash flows from operating activities:
Net income (loss)		$	5,373			$	(2,448	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			4,965				5,161
Share based compensation			(7,179	)			5,196
Deferred income taxes			(231	)			(436	)
Bad debt expense			324				53
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Accounts receivable			700				(119	)
Inventories, net			16,761				(12,438	)
Prepaid income taxes			(152	)			65
Prepaid expenses and other current assets			2,437				(2,664	)
Operating lease right-of-use assets, net			355				594
Accounts payable			(26,078	)			7,929
Sales tax payable			(529	)			(1,942	)
Accrued expenses and other current liabilities			2,756				(1,258	)
Lease liabilities			(349	)			(577	)
Deferred revenue			(1,447	)			75
Net cash used in operating activities		$	(2,294	)		$	(2,808	)
Cash flows from investing activities:
Purchase of minority interest investment in Vetster			-				(300	)
Acquisition of PetCareRx, net of cash acquired			-				(35,859	)
Purchases of property and equipment			(2,725	)			(3,260	)
Net cash used in investing activities		$	(2,725	)		$	(39,419	)
Cash flows from financing activities:
Dividends paid			(176	)			(12,419	)
Net cash used in financing activities		$	(176	)		$	(12,419	)
Net decrease in cash and cash equivalents			(5,195	)			(54,646	)
Cash and cash equivalents, at beginning of period			55,296				104,086
Cash and cash equivalents, at end of period		$	50,101			$	49,440
Supplemental disclosure of cash flow information:
Cash paid for income taxes		$	474			$	43
Dividends payable in accrued expenses and other current liabilities		$	32			$	1,498
Non-cash investing activity for PPE additions		$	2,539			$	-

Non-GAAP Financial Measures

To provide investors and the market with additional information regarding our financial results, we have disclosed (see below) adjusted EBITDA, a non-GAAP financial measure that we calculate as net income excluding share-based compensation expense; depreciation and amortization; income tax provision; interest income (expense); and other non-operational expenses. We have provided reconciliations below of adjusted EBITDA to net income, the most directly comparable GAAP financial measures.

We have included adjusted EBITDA, herein, because it is a key measure used by our management and Board of Directors to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and other expenses. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

We believe it is useful to exclude non-cash charges, such as share-based compensation expense, 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 expenses, including the investment banking fee related to the Vetster partnership, acquisition costs related to PetCareRx, employee severance and estimated state sales tax accrual as these items are not indicative of our ongoing operations. Adjusted EBITDA has limitations as a financial measure, and these non-GAAP measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;
• Adjusted EBITDA does not reflect share-based compensation. Share-based compensation has been, and will continue to be for the foreseeable future, a material recurring expense in our business and an important part of our compensation strategy;
• Adjusted EBITDA does not reflect interest income (expense), net; or changes in, or cash requirements for, our working capital;
• Adjusted EBITDA does not reflect transaction related costs and other items which are either not representative of our underlying operations or are incremental costs that result from an actual or planned transaction and include litigation matters, integration consulting fees, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems;
• Adjusted EBITDA does not reflect certain non-operating expenses including the employee severance which reduces cash available to us;
• Adjusted EBITDA does not reflect certain expenses including the estimated state sales tax accrual which reduces cash available to us.
• Other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces the measures usefulness as comparative measures.

Because of these and other limitations, adjusted EBITDA should only be considered as supplemental to, and alongside with other GAAP based financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results.

The following table presents a reconciliation of net income, the most directly comparable GAAP measure to adjusted EBITDA for each of the periods indicated:

Reconciliation of Non-GAAP Measures
PetMed Express, Inc.
(Unaudited)
		Three Months Ended								Increase (Decrease)
($ in thousands, except percentages)		December 31, 2024				December 31, 2023				$				%
Consolidated Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA:
Net loss		$	(707	)		$	(2,027	)		$	1,320			(65	)%
Add (subtract):
Stock-based Compensation		$	452			$	1,708			$	(1,256	)		(74	)%
Income Taxes		$	465			$	(618	)		$	1,083			(175	)%
Depreciation and Amortization		$	1,586			$	1,770			$	(184	)		(10	)%
Interest Income, Net(1)		$	(28	)		$	(136	)		$	108			(79	)%
Acquisition/Partnership Transactions and Other Items		$	25			$	-			$	25			n/m
Employee Severance		$	209			$	-			$	209			n/m
Sales Tax Expense		$	-			$	228			$	(228	)		(100	)%
Adjusted EBITDA		$	2,002			$	925			$	1,077			116	%
(1) Included in interest income, net is $0.4 million of interest expense related to the sales tax liability and $0.5 million of interest income for the three months ended December 31, 2024. This compares to $0.4 million of interest expense related to the sales tax liability and $0.6 million of interest income for the three months ended December 31, 2023.

		Nine Months Ended								Increase (Decrease)
($ in thousands, except percentages)		December 31, 2024				December 31, 2023				$				%
Consolidated Reconciliation of GAAP Net Income to Adjusted EBITDA:
Net income (loss)		$	5,373			$	(2,448	)		$	7,821			n/m
Add (subtract):
Stock-based Compensation		$	(7,179	)		$	5,196			$	(12,375	)		n/m
Income Taxes		$	22			$	(345	)		$	367			n/m
Depreciation and Amortization		$	4,965			$	5,161			$	(196	)		(4	)%
Interest Income, Net (1)		$	(308	)		$	(481	)		$	173			(36	)%
Acquisition/Partnership Transactions and Other Items		$	205			$	1,294			$	(1,089	)		(84	)%
Employee Severance		$	663			$	408			$	255			63	%
Sales Tax (Income)		$	(1,178	)		$	(1,088	)		$	(90	)		8	%
Adjusted EBITDA		$	2,563			$	7,697			$	(5,134	)		(67	)%
(1) Included in interest income, net is $1.2 million of interest expense related to the sales tax liability and $1.5 million of interest income for the nine months ended December 31, 2024. This compares to $1.3 million of interest expense related to the sales tax liability and $1.7 million of interest income for the nine months ended December 31, 2023.