PetMed Express (NASDAQ:PETS) reported fiscal first-quarter net sales of $41 million, down 19.9% from $51.2 million a year earlier, as continued softness in prescription medication sales weighed on results. The company said sales remained above $40 million for a third consecutive quarter, which management characterized as sequential stabilization.
The company posted a net loss of $6.1 million, or $0.28 per diluted share, compared with a $34.2 million loss, or $1.65 per diluted share, in the prior-year period. The improvement primarily reflected the absence of the prior year’s goodwill and trade-name impairment charge, along with reductions in general and administrative expenses and advertising spending.
Cost Reductions Offset Lower Sales
General and administrative expenses decreased 13.5% year over year to $11.2 million, driven by lower professional fees, share-based compensation and severance costs. Advertising expense declined 30.2% to $4.2 million, reflecting lower gross media spending and the elimination of media programs that the company considered unproductive.
Despite the narrower net loss, adjusted EBITDA loss widened to $3.4 million from $2.7 million in the prior-year period.
- Net sales: $41 million, down from $51.2 million.
- Gross profit: $11.3 million, down from $14.4 million.
- Net loss: $6.1 million, compared with a $34.2 million loss.
- Advertising expense: $4.2 million, down from $6 million.
- Cash and cash equivalents: $13.1 million as of June 30, 2026.
- Debt: None as of June 30, 2026.
Customer Acquisition and Recurring Revenue
Chairman, Interim CEO and President Leslie Campbell said recurring net sales, including auto-ship and membership-related revenue, rose to 61.5% of total gross sales from 57.6% a year earlier. The company acquired about 70,000 new customers during the quarter, a figure Campbell said has trended upward over recent quarters.
PetMeds reduced its customer acquisition cost by 15% to $60 from $71 in the year-earlier period. Campbell attributed the improvement to advertising and media-spending optimization, including the selective removal of higher-cost and unproductive programs.
Management said it is seeking to diversify its acquisition funnel beyond traditional advertising and media channels, which Campbell said have become more expensive. The company is also pursuing business-to-business relationships, membership programs and white-label fulfillment services as potential sources of new customers and revenue.
Technology, Delivery and Rural King Partnership
PetMeds highlighted several operational initiatives intended to improve efficiency and customer experience. The company launched a new call-center platform in June, which Campbell said has improved the handling of customer inquiries and sales. It also completed an enterprise resource planning upgrade, rolling out SAP across the company in May.
The company said its fraud-prevention system, launched during the prior fourth quarter, continues to protect the business as order volumes change. In addition, PetMeds entered a new freight agreement that it said mitigates proposed cost increases from a prior carrier and provides faster, more trackable deliveries. West Coast customers may receive orders up to two days faster under the new arrangement, according to Campbell.
In July, PetMeds launched a co-branded online pharmacy offering with Rural King. The program gives customers at Rural King’s more than 150 stores in 17 states access to pet medications, prescription food, preventatives and auto-ship services through a PetMeds-powered platform. Campbell called the initiative the company’s first large-scale white-label pharmacy program and said management expects to extend the offering to additional partners.
Real Estate Transaction and Strategic Review
On July 23, PetMeds announced a definitive agreement for a sale-leaseback of its Delray Beach, Florida, headquarters and distribution-center buildings for an aggregate purchase price of $37 million. The company expects to lease back the office and Florida distribution-center portion of the property under a 10-year lease with renewal options.
Management expects the transaction to close within approximately 120 days of the definitive agreement, subject to due diligence, lease negotiations and customary closing conditions. Campbell said the sale-leaseback is intended to unlock real-estate value, strengthen the balance sheet and provide flexibility to invest in initiatives aimed at shareholder returns.
Campbell also addressed SilverCape Investments’ unsolicited, non-binding and conditional proposal to acquire all outstanding shares for $3 per share in cash. He said the board had not reached a determination on the proposal and that there is no assurance a transaction will result. The board is also continuing its search for a permanent chief executive with assistance from a global executive search firm.
About PetMed Express (NASDAQ:PETS)
PetMed Express, Inc operates as an online and catalog-based pet pharmacy and retail supplier under the 1-800-PetMeds brand name. The company distributes prescription and non?prescription medications, nutritional supplements, flea and tick control products, and a range of pet health supplies directly to consumers. Through its licensed veterinary pharmacy in Delray Beach, Florida, PetMed Express fills orders for dogs, cats and other companion animals, offering both branded and generic products alongside its own private?label formulations.
Founded in 1996 by Marc Puleo, PetMed Express built its business on the premise of convenience and cost savings for pet owners seeking reliable access to veterinary medications.
