PetMed Express (PETS) Q1 2026 earnings summary

Executive summary

• Net sales for the quarter ended June 30, 2025, declined 22.7% year-over-year to $51.2 million, driven by lower advertising, increased promotional activity, and a drop in prescription medication sales.

• Gross profit fell 24.3% to $14.4 million, with gross margin decreasing slightly to 28.1% due to higher discounts and freight costs.

• The company recorded a net loss of $34.2 million, compared to net income of $3.8 million in the prior year, primarily due to a $26.7 million goodwill impairment and a $0.6 million trade name impairment.

• Adjusted EBITDA was negative $2.7 million, down from negative $1.5 million in the prior year.

Financial highlights

• Reorder sales decreased 21.8% to $41.3 million; new order sales dropped 25.6% to $8.2 million; membership fees declined 29.9% to $1.6 million.

• Cost of sales decreased 22.0% to $36.8 million, but as a percentage of sales, increased to 71.9%.

• General and administrative expenses rose 165.7% to $12.9 million, mainly due to higher stock-based compensation and professional fees.

• Advertising expenses fell 25.0% to $6.0 million, with customer acquisition costs rising to $71 per new customer.

• Cash and cash equivalents at quarter-end were $41.1 million, down from $54.7 million at the prior year-end.

Outlook and guidance

• Management expects ongoing macroeconomic headwinds, including inflation, interest rates, and consumer demand uncertainty, to continue impacting operations and revenue growth rates for the remainder of fiscal 2026.

• The company believes current cash and expected future cash flows are sufficient for at least the next twelve months.