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Healthy Choice Wellness Corp.(HCWC) - 2025 Q2 - Quarterly Report
2025-08-14 21:12
PART I - FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and related notes, along with management's discussion and analysis, market risk disclosures, and controls and procedures for the reporting period [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Healthy Choice Wellness Corp. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and financial position [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | **ASSETS** | | | | Cash and cash equivalents | $4,690,026 | $2,056,472 | | Total Current Assets | $14,501,258 | $9,706,957 | | Total Assets | $36,401,719 | $34,112,517 | | **LIABILITIES & EQUITY** | | | | Total Current Liabilities | $13,231,925 | $11,940,313 | | Total Liabilities | $30,639,333 | $31,732,516 | | Total Stockholders' Equity | $5,762,386 | $2,380,001 | - Total assets increased by **$2.29 million (6.7%)** from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents and due from related party[17](index=17&type=chunk) - Total stockholders' equity significantly increased by **$3.38 million (141.9%)** from December 31, 2024, to June 30, 2025, indicating new equity financing[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including sales, cost of sales, gross profit, and net loss over specific periods Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | SALES, NET | $20,199,979 | $15,594,575 | $40,459,585 | $31,488,933 | | COST OF SALES | $12,106,603 | $9,698,119 | $24,514,300 | $19,538,100 | | GROSS PROFIT | $8,093,376 | $5,896,456 | $15,945,285 | $11,950,833 | | LOSS FROM OPERATIONS | $(39,032) | $(481,558) | $(448,708) | $(1,083,304) | | NET LOSS | $(339,359) | $(595,707) | $(1,051,769) | $(1,297,170) | | BASIC AND DILUTED NET LOSS PER SHARE | $(0.03) | $(0.06) | $(0.09) | $(0.14) | - Net sales increased by **$4.6 million (29.5%)** for the three months ended June 30, 2025, and by **$9.0 million (28.5%)** for the six months ended June 30, 2025, compared to the same periods in 2024[19](index=19&type=chunk) - Net loss decreased for both the three-month period (from **$(0.60 million)** to **$(0.34 million)**) and the six-month period (from **$(1.30 million)** to **$(1.05 million)**), indicating improved profitability[19](index=19&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in the company's equity, including common stock, preferred stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Class A Common Stock Shares Outstanding | 12,565,750 | 9,815,749 | | Series A Convertible Preferred Stock Shares Outstanding | 3,250 | 0 | | Additional Paid-In Capital | $7,532,493 | $3,101,092 | | Accumulated Deficit | $(1,782,676) | $(730,907) | | Total Stockholders' Equity | $5,762,386 | $2,380,001 | - Issuance of common stock for debt conversion contributed **$1.31 million** to total equity for the six months ended June 30, 2025[21](index=21&type=chunk) - Issuance of Series A convertible preferred stock added **$3.13 million** to total equity for the six months ended June 30, 2025[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities for the specified periods Condensed Consolidated Statements of Cash Flows | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $2,159,785 | $(3,001,342) | | Net cash used in investing activities | $(205,886) | $(116,978) | | Net cash provided by financing activities | $679,655 | $2,659,986 | | Net increase (decrease) in cash and cash equivalents | $2,633,554 | $(458,334) | | Cash — End of Period | $4,690,026 | $964,246 | - Operating activities generated **$2.16 million** in cash for the six months ended June 30, 2025, a significant improvement from a **$3.00 million** cash usage in the prior year[23](index=23&type=chunk) - Cash and cash equivalents at the end of the period increased to **$4.69 million** in 2025 from **$0.96 million** in 2024[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [NOTE 1. ORGANIZATION](index=8&type=section&id=NOTE%201.%20ORGANIZATION) This note describes the company's business, subsidiaries, and the details of its spin-off from Healthier Choices Management Corp - Healthy Choice Wellness Corp. (HCWC) is a holding company focused on providing healthier daily choices in nutrition and lifestyle alternatives through its wholly-owned subsidiaries[25](index=25&type=chunk) - HCWC operates a Healthy Choice Wellness Center, Healthy U Wholesale (online vitamins/supplements), and several natural and organic grocery store chains including Ada's Natural Market, Paradise Health & Nutrition, Mother Earth's Storehouse, Greens Natural Foods, Ellwood Thompson's, and GreenAcres Market[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - HCWC completed its spin-off from Healthier Choices Management Corp. (HCMC) on September 13, 2024, becoming an independent, publicly traded company on NYSEAM under 'HCWC'[31](index=31&type=chunk)[32](index=32&type=chunk) Key Supplier Concentrations | Supplier | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | KeHe Distributors, LLC | 32% of total purchases | N/A | 29% of total purchases | N/A | | Four Seasons Produce | 19% of total purchases | 20% of total purchases | 17% of total purchases | 18% of total purchases | | UNFI | N/A | 36% of total purchases | 11% of total purchases | 36% of total purchases | [NOTE 2. GOING CONCERN](index=9&type=section&id=NOTE%202.%20GOING%20CONCERN) This note assesses the company's ability to continue operations, considering its cash position, working capital, and financing commitments - As of June 30, 2025, the Company had **$4.7 million** in cash and cash equivalents and positive working capital of **$1.3 million**[35](index=35&type=chunk) - For the six months ended June 30, 2025, the Company incurred net losses of approximately **$1.1 million** but generated cash from operating activities of approximately **$2.2 million**[35](index=35&type=chunk) - Management concluded that no substantial doubt exists about the Company's ability to continue as a going concern, supported by cash on hand and expected proceeds from a **$10.0 million** equity commitment[35](index=35&type=chunk)[39](index=39&type=chunk) - HCWC secured **$13.25 million** in equity financing commitments, of which **$3.25 million** has been received as of June 30, 2025, with **$10.0 million** remaining[33](index=33&type=chunk)[38](index=38&type=chunk) [NOTE 3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%203.%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the accounting principles, revenue recognition policies, and segment reporting approach used in preparing the financial statements - The financial statements are prepared in accordance with GAAP and, through the Spin-Off date, were derived from HCMC's records on a carve-out basis, including allocations of certain expenses[40](index=40&type=chunk)[41](index=41&type=chunk) - The Company operates as a single reportable segment, aggregating its Grocery and Wellness segments due to similar economic characteristics and CODM review at a consolidated level[42](index=42&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - Revenue from product sales and services is recognized at a point in time when control transfers to the customer, net of discounts and allowances[47](index=47&type=chunk)[50](index=50&type=chunk) - The Company adopted ASU 2023-07 (Segment Reporting) effective January 1, 2024, retrospectively, resulting in enhanced expense disclosures but no material impact on consolidated financial statements due to its single reportable segment[84](index=84&type=chunk)[86](index=86&type=chunk)[101](index=101&type=chunk) [NOTE 4. CONCENTRATIONS](index=19&type=section&id=NOTE%204.%20CONCENTRATIONS) This note details significant concentrations of risk, including cash held in financial institutions and reliance on key suppliers - The majority of the Company's cash is concentrated in one financial institution, exceeding FDIC coverage limits, but no losses have been experienced[90](index=90&type=chunk)[91](index=91&type=chunk) Cash in Excess of FDIC Limits | Date | Amount | | :---------------- | :------------- | | June 30, 2025 | $3,659,384 | | December 31, 2024 | $715,852 | - For the three months ended June 30, 2025, KeHe Distributors accounted for **32%** of total purchases and Four Seasons Produce for **19%**; for the six months ended June 30, 2025, KeHe was **29%**, Four Seasons Produce **17%**, and UNFI **11%**[93](index=93&type=chunk) - KeHe replaced UNFI as the primary supplier for dry grocery and frozen food products starting January 2025, under a contract through February 28, 2027[94](index=94&type=chunk) [NOTE 5. ACCOUNTS RECEIVABLE, NET](index=20&type=section&id=NOTE%205.%20ACCOUNTS%20RECEIVABLE%2C%20NET) This note provides details on accounts receivable, including advertising revenue and the allowance for credit losses - Accounts receivable primarily relates to CO-OP billing for advertising vendors' products, with advertising revenue included in sales[96](index=96&type=chunk) Advertising Revenue | Period | 2025 | 2024 | | :-------------------- | :----------- | :---------- | | Three Months Ended June 30 | $734,000 | $66,000 | | Six Months Ended June 30 | $1,062,000 | $179,000 | Accounts Receivable and Credit Loss Allowance | Date | Accounts Receivable | Credit Loss Allowance | | :---------------- | :------------------ | :-------------------- | | June 30, 2025 | $453,000 | $48,000 | | December 31, 2024 | $510,000 | $28,000 | [NOTE 6. INVENTORIES](index=20&type=section&id=NOTE%206.%20INVENTORIES) This note describes the valuation method for inventories and reports inventory write-downs for the periods presented - Inventories are measured at the lower of cost and net realizable value using the average cost method[98](index=98&type=chunk) Inventory Write-Downs | Period | 2025 | 2024 | | :-------------------- | :----------- | :----------- | | Three Months Ended June 30 | $549,000 | $741,000 | | Six Months Ended June 30 | $1,146,000 | $1,485,000 | [NOTE 7. SEGMENT INFORMATION AND DISAGGREGATION OF REVENUES](index=20&type=section&id=NOTE%207.%20SEGMENT%20INFORMATION%20AND%20DISAGGREGATION%20OF%20REVENUES) This note explains the company's segment reporting and disaggregates revenue by category for the specified periods - The Company operates in two segments (Grocery and Wellness) but aggregates them into a single reportable segment due to similar economic characteristics and consolidated CODM review[99](index=99&type=chunk)[100](index=100&type=chunk) Significant Segment Expenses | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Advertising | $84,061 | $43,161 | $241,933 | $201,230 | | Payroll and Benefits | $3,917,799 | $3,200,050 | $7,814,401 | $6,522,601 | | Occupancy | $1,859,964 | $1,450,702 | $3,683,410 | $2,870,911 | | Depreciation and Amortization | $434,717 | $361,817 | $864,627 | $724,958 | | Bank Service Charges and Merchant Account Fees | $362,079 | $305,093 | $762,348 | $605,632 | | Other selling, general and administrative expenses | $485,621 | $406,318 | $947,538 | $802,725 | | Total significant reporting segment expenses | $7,144,241 | $5,767,141 | $14,314,257 | $11,728,057 | | Unallocated amount | $988,167 | $610,873 | $2,079,736 | $1,306,080 | | Total consolidated operating expenses | $8,132,408 | $6,378,014 | $16,393,993 | $13,034,137 | Revenue Disaggregation by Category | Revenue Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Retail Grocery | $18,304,905 | $13,364,836 | $36,757,772 | $26,802,107 | | Food service/restaurant | $1,877,421 | $2,170,903 | $3,664,220 | $4,585,897 | | Online/eCommerce | $17,653 | $58,836 | $37,593 | $100,929 | | Total revenue | $20,199,979 | $15,594,575 | $40,459,585 | $31,488,933 | [NOTE 8. ACQUISITIONS](index=21&type=section&id=NOTE%208.%20ACQUISITIONS) This note details the acquisition of GreenAcres Market grocery stores, including purchase price allocation and pro forma sales information - On July 18, 2024, the Company acquired five GreenAcres Market grocery stores for a cash purchase price of **$5.48 million** and a promissory note of **$1.83 million**[106](index=106&type=chunk)[107](index=107&type=chunk) GreenAcres Market Purchase Price Allocation (July 18, 2024) | Asset Category | Amount | | :-------------------------- | :------------- | | Inventory | $2,400,000 | | Property, plant, and equipment | $127,000 | | Intangible assets | $2,304,000 | | Goodwill | $2,212,000 | | **Total Purchase Consideration** | **$7,043,000** | - Pro forma sales for the six months ended June 30, 2025, including GreenAcres Market as if acquired on January 1, 2024, would have been **$40.46 million**, compared to **$39.16 million** for the same period in 2024[110](index=110&type=chunk) [NOTE 9. ASSETS HELD FOR SALE](index=22&type=section&id=NOTE%209.%20ASSETS%20HELD%20FOR%20SALE) This note describes the classification and subsequent sale of a building previously held for sale - The Company closed its Saugerties, NY store on February 7, 2024, and classified the owned building, with a net carrying value of approximately **$0.54 million**, as held for sale[111](index=111&type=chunk) - The Saugerties building was sold on July 24, 2024, for a fair market value of **$0.75 million**, yielding net proceeds of **$0.70 million** after expenses[112](index=112&type=chunk) [NOTE 10. PROPERTY, PLANT, AND EQUIPMENT](index=23&type=section&id=NOTE%2010.%20PROPERTY%2C%20PLANT%2C%20AND%20EQUIPMENT) This note presents the net carrying value of property, plant, and equipment and reports depreciation expense for the periods Property, Plant, and Equipment, Net | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total Property, Plant, and Equipment (Gross) | $4,146,473 | $3,944,467 | | Less: Accumulated Depreciation and Amortization | $(2,237,839) | $(1,967,998) | | **Total Property, Plant, and Equipment, Net** | **$1,908,634** | **$1,976,469** | Depreciation Expense | Period | 2025 | 2024 | | :-------------------- | :----------- | :----------- | | Three Months Ended June 30 | $138,000 | $131,000 | | Six Months Ended June 30 | $272,000 | $265,000 | [NOTE 11. INTANGIBLE ASSETS](index=23&type=section&id=NOTE%2011.%20INTANGIBLE%20ASSETS) This note details the company's intangible assets, including trade names, customer relationships, and non-compete agreements, along with their amortization Intangible Assets, Net | Category | Useful Lives (Years) | Gross Carrying Amount (June 30, 2025) | Accumulated Amortization (June 30, 2025) | Net Carrying Amount (June 30, 2025) | | :-------------------- | :------------------- | :------------------------------------ | :--------------------------------------- | :------------------------------------ | | Trade names | 8-13 | $4,444,000 | $(1,657,221) | $2,786,779 | | Customer relationships | 4-6 | $2,669,000 | $(1,777,472) | $891,528 | | Non-compete | 4-5 | $2,322,000 | $(1,151,885) | $1,170,115 | | **Total Intangible Assets, Net** | | **$9,435,000** | **$(4,586,578)** | **$4,848,422** | Amortization Expense | Period | 2025 | 2024 | | :-------------------- | :----------- | :----------- | | Three Months Ended June 30 | $297,000 | $230,000 | | Six Months Ended June 30 | $593,000 | $460,000 | Future Annual Estimated Amortization Expense | Years ending December 31, | Amount | | :-------------------------- | :------------- | | 2025 (remaining six months) | $587,556 | | 2026 | $1,103,576 | | 2027 | $964,771 | | 2028 | $655,332 | | 2029 | $447,896 | | Thereafter | $1,089,291 | | **Total** | **$4,848,422** | [NOTE 12. GOODWILL](index=24&type=section&id=NOTE%2012.%20GOODWILL) This note describes the company's goodwill, its impairment testing policy, and the carrying amount for the reporting periods - Goodwill is tested for impairment annually on September 30 or more frequently if indicators suggest impairment[116](index=116&type=chunk) - No goodwill impairment charges were recognized for the three or six months ended June 30, 2025, or 2024[117](index=117&type=chunk) Goodwill Carrying Amount | Date | Amount | | :---------------- | :------------- | | June 30, 2025 | $2,212,000 | | December 31, 2024 | $2,212,000 | [NOTE 13. ACCOUNTS PAYABLE AND ACCRUED EXPENSES](index=24&type=section&id=NOTE%2013.%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20EXPENSES) This note provides a breakdown of accounts payable and accrued expenses, highlighting changes between reporting dates Accounts Payable and Accrued Expenses | Category | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | Trade creditors | $7,682,254 | $5,133,782 | | Accrued expenses | $778,894 | $997,752 | | **Total** | **$8,461,148** | **$6,131,534** | - Total accounts payable and accrued expenses increased by **$2.33 million (38.0%)** from December 31, 2024, to June 30, 2025, primarily due to an increase in trade creditors[119](index=119&type=chunk) [NOTE 14. DEBT](index=25&type=section&id=NOTE%2014.%20DEBT) This note details the company's debt obligations, including promissory notes, debt discounts, and the repayment schedule Debt Breakdown, Net of Discount and Issuance Costs | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Promissory note | $9,968,830 | $11,623,392 | | Debt discount and issuance cost | $(250,129) | $(284,283) | | **Total debt, net** | **$9,718,701** | **$11,339,109** | | Current portion of long-term debt | $(1,107,872) | $(2,200,210) | | Current portion of debt discount and issuance cost | $68,874 | $68,873 | | **Long-term debt** | **$8,679,703** | **$9,207,772** | - The Company reduced its outstanding principal under the July 18, 2024 Loan and Security Agreement by **$1.31 million** through debt-to-equity conversions in March, April, and May 2025[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) Five-Year Debt Repayment Schedule | Years ending December 31, | Amount | | :-------------------------- | :------------- | | 2025 (remaining six months) | $545,648 | | 2026 | $3,016,526 | | 2027 | $5,595,359 | | 2028 | $534,923 | | 2029 | $276,374 | | **Total** | **$9,968,830** | [NOTE 15. LEASES](index=27&type=section&id=NOTE%2015.%20LEASES) This note outlines the company's operating lease agreements, right-of-use assets, lease liabilities, and associated expenses - The Company has various operating lease agreements with terms up to 20 years[134](index=134&type=chunk) Operating Lease Liabilities and ROU Assets | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Right of use assets | $12,386,466 | $14,232,240 | | Operating lease liability, current | $3,687,002 | $3,596,987 | | Operating lease liability, net of current | $8,727,705 | $10,584,431 | | **Total operating lease liabilities** | **$12,414,707** | **$14,181,418** | Operating Lease Expenses | Expense Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $864,402 | $643,036 | $1,719,038 | $1,280,138 | | Variable lease cost | $46,163 | $218,165 | $104,950 | $425,711 | | Short-term lease cost | $63,758 | $79,291 | $126,736 | $157,823 | | **Total rent expense** | **$974,323** | **$940,492** | **$1,950,724** | **$1,863,672** | [NOTE 16. RELATED PARTY TRANSACTIONS](index=28&type=section&id=NOTE%2016.%20RELATED%20PARTY%20TRANSACTIONS) This note describes transactions and agreements with related parties, particularly with Healthier Choices Management Corp. before and after the spin-off - Prior to the Spin-Off, HCMC provided various services to the Company, with allocated expenses of **$0.7 million** and **$1.3 million** for the three and six months ended June 30, 2024, respectively[139](index=139&type=chunk) - Post-Spin-Off, HCWC and HCMC entered into a Transition Services Agreement (TSA) for transitional services, with shared costs allocated using a **50%** proportional method[139](index=139&type=chunk)[140](index=140&type=chunk) Due from Related Party (HCMC) | Date | Amount | | :---------------- | :------------- | | June 30, 2025 | $2,111,354 | | December 31, 2024 | $190,268 | - The increase in 'due from related party' is due to HCWC's continued funding to HCMC's operations during the transition period, which is short-term and repayable within 12 months[142](index=142&type=chunk) [NOTE 17. STOCKHOLDERS' EQUITY](index=30&type=section&id=NOTE%2017.%20STOCKHOLDERS'%20EQUITY) This note details changes in stockholders' equity, including common stock issuances, preferred stock offerings, and the impact of the spin-off - The Company completed its spin-off from HCMC on September 13, 2024, resulting in the initial issuance of approximately **9.2 million** shares of HCWC common stock[146](index=146&type=chunk)[147](index=147&type=chunk) - In March, April, and May 2025, the Company issued **2.75 million** shares of Class A common stock in exchange for **$1.31 million** of outstanding debt[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - On June 20, 2025, HCWC completed an offering of **3,250** shares of Series A Convertible Preferred Stock for **$3.25 million**, with binding commitments for an additional **$10.0 million**[151](index=151&type=chunk)[152](index=152&type=chunk) - As of June 30, 2025, there were **12.57 million** shares of Class A common stock and **3,250** shares of Series A Convertible Preferred Stock outstanding[153](index=153&type=chunk) [NOTE 18. COMMITMENTS AND CONTINGENCIES](index=30&type=section&id=NOTE%2018.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's legal commitments and contingencies, including ongoing lawsuits and their potential financial impact - A lawsuit was filed against a subsidiary on July 31, 2024, by a former employee alleging wage and hour law violations; the Company believes the claims are without merit and does not expect a material adverse effect[154](index=154&type=chunk) - The Company is involved in other legal proceedings in the ordinary course of business but does not believe any will have a material adverse effect on its financial condition or results of operations as of June 30, 2025[155](index=155&type=chunk) [NOTE 19. SUBSEQUENT EVENTS](index=30&type=section&id=NOTE%2019.%20SUBSEQUENT%20EVENTS) This note reports significant events that occurred after the balance sheet date, including debt conversions and registration statements - On July 15, 2025, the Company exchanged **$1.0 million** of principal debt for **2.5 million** shares of Class A common stock, leaving **$5.38 million** unpaid under the Credit Agreement[158](index=158&type=chunk) - A registration statement on Form S-1 for the resale of **2.36 million** shares of Class A common stock (issuable upon conversion of HCWC Preferred Stock) was declared effective on July 23, 2025[159](index=159&type=chunk) - On July 22, 2025, a Form S-8 registration statement was filed for **2.63 million** shares of Class A common stock under the 2024 Equity Incentive Plan[160](index=160&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to 2024, highlighting key performance drivers, liquidity, and critical accounting estimates [Company Overview](index=32&type=section&id=Company%20Overview) This section provides a high-level description of Healthy Choice Wellness Corp.'s business and operational focus - Healthy Choice Wellness Corp. is a holding company focused on providing healthier daily choices through its subsidiaries, which operate natural and organic grocery stores and wellness centers[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) [Liquidity](index=33&type=section&id=Liquidity) This section discusses the company's cash position, working capital, and ability to meet its financial obligations - As of June 30, 2025, the Company had approximately **$4.7 million** in cash and positive working capital of **$1.3 million**[167](index=167&type=chunk) - The financial statements are prepared on a going concern basis, with management believing current liquidity and expected equity commitments will meet obligations for at least the next twelve months[166](index=166&type=chunk) [Factors Affecting Our Performance](index=33&type=section&id=Factors%20Affecting%20Our%20Performance) This section identifies key internal and external elements influencing the company's operational and financial results - Key factors affecting performance include the operating performance of its retail stores (four in Florida, nine in NY/NJ, one in VA, five in KS/OK) and increased competition from various food retailers and dining options[168](index=168&type=chunk)[169](index=169&type=chunk) - Changing consumer preferences and expected downward pressure on prices also impact operating results[169](index=169&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including sales, gross profit, and net loss, for the reporting periods Three Months Ended June 30, 2025 vs. 2024 | Metric | 2025 | 2024 | Change ($) | | :-------------------- | :----------- | :----------- | :----------- | | Net Sales | $20,199,979 | $15,594,575 | $4,605,404 | | Cost of Sales | $12,106,603 | $9,698,119 | $2,408,484 | | Gross Profit | $8,093,376 | $5,896,456 | $2,196,920 | | Operating Expenses | $8,132,408 | $6,378,014 | $1,754,394 | | Loss from Operations | $(39,032) | $(481,558) | $442,526 | | Net Loss | $(339,359) | $(595,707) | $256,348 | - Net sales increased by **$4.6 million (29.5%)** for the three months ended June 30, 2025, primarily due to the GreenAcres Market acquisition (**$3.5 million**) and a **$1.1 million** increase in same-store sales[170](index=170&type=chunk) - Gross margin as a percentage of sales increased by approximately **2.3%** for the three months ended June 30, 2025[171](index=171&type=chunk) Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 | 2024 | Change ($) | | :-------------------- | :----------- | :----------- | :----------- | | Net Sales | $40,459,585 | $31,488,933 | $8,970,652 | | Cost of Sales | $24,514,300 | $19,538,100 | $4,976,200 | | Gross Profit | $15,945,285 | $11,950,833 | $3,994,452 | | Operating Expenses | $16,393,993 | $13,034,137 | $3,359,856 | | Loss from Operations | $(448,708) | $(1,083,304) | $634,596 | | Net Loss | $(1,051,769) | $(1,297,170) | $245,401 | - Net sales increased by **$9.0 million (28.5%)** for the six months ended June 30, 2025, driven by the GreenAcres Market acquisition (**$7.2 million**) and a **$1.8 million** increase in same-store sales[174](index=174&type=chunk) - Gross margin as a percentage of sales increased by approximately **1.5%** for the six months ended June 30, 2025[175](index=175&type=chunk) [Lease Commitments, Known Trends and Uncertainties](index=34&type=section&id=Lease%20Commitments%2C%20Known%20Trends%20and%20Uncertainties) This section details the company's lease obligations and discusses potential impacts from economic trends and uncertainties - As of June 30, 2025, the Company has operating lease obligations totaling **$12.4 million**, with a weighted-average remaining lease term of **4 years** and a weighted-average discount rate of **5.24%**[178](index=178&type=chunk) Rent Expense | Period | 2025 | 2024 | | :-------------------- | :----------- | :----------- | | Three Months Ended June 30 | $974,000 | $940,000 | | Six Months Ended June 30 | $1,951,000 | $1,864,000 | - Rent expense is expected to rise incrementally over the next two years as additional leases reset to higher rates, and rising interest rates and inflation could increase future lease obligation costs[178](index=178&type=chunk)[179](index=179&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section examines the company's cash flow from operating, investing, and financing activities, and its overall capital structure Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | | :-------------------------------- | :----------- | :------------- | | Net cash provided by (used in) Operating activities | $2,159,785 | $(3,001,342) | | Net cash used in Investing activities | $(205,886) | $(116,978) | | Net cash provided by Financing activities | $679,655 | $2,659,986 | | **Net increase (decrease) in cash and cash equivalents** | **$2,633,554** | **$(458,334)** | - Operating activities generated **$2.2 million** in cash in 2025, a significant improvement from a **$3.0 million** usage in 2024, despite a net loss[180](index=180&type=chunk) - Financing activities provided **$0.7 million** in 2025, including **$3.1 million** from preferred stock offering, offset by loan payments and related party payments[182](index=182&type=chunk) Cash Position | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash | $4,690,026 | $2,056,472 | | Total assets | $36,401,719 | $34,112,517 | | Cash as a percentage of total assets | 12.88% | 6.03% | [Off-Balance Sheet Arrangements](index=36&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements that could materially affect the company's financial position - The Company does not have any off-balance sheet arrangements[187](index=187&type=chunk) [Critical Accounting Estimates](index=36&type=section&id=Critical%20Accounting%20Estimates) This section highlights the significant judgments and assumptions used in preparing the financial statements, which could impact reported results - Critical accounting estimates involve significant judgment, including useful lives and impairment of long-lived assets, deferred taxes, allocation of corporate general expenses, and valuation of acquired assets/liabilities in business combinations[188](index=188&type=chunk) - Estimates are based on historical experience, industry knowledge, economic conditions, and regulatory environment, and are re-evaluated quarterly[189](index=189&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, such as Adjusted EBITDA, used by management to assess performance - Management uses Adjusted EBITDA as a non-GAAP financial measure to evaluate core operating results, excluding non-cash and non-recurring charges[191](index=191&type=chunk)[192](index=192&type=chunk) Reconciliation from Net Loss to Adjusted EBITDA | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(339,359) | $(595,707) | $(1,051,769) | $(1,297,170) | | Interest expense | $268,955 | $117,977 | $566,685 | $221,049 | | Depreciation and amortization | $434,957 | $361,817 | $864,947 | $724,958 | | EBITDA | $364,553 | $(115,913) | $379,863 | $(351,163) | | Other income, net | $31,372 | $(3,828) | $36,376 | $(7,183) | | **Adjusted EBITDA** | **$395,925** | **$(119,741)** | **$416,239** | **$(358,346)** | - Adjusted EBITDA showed a positive trend, moving from negative in 2024 to positive in 2025 for both three-month and six-month periods[194](index=194&type=chunk) [Seasonality](index=38&type=section&id=Seasonality) This section addresses whether the company's business operations are subject to seasonal fluctuations - The Company does not consider its business to be seasonal[197](index=197&type=chunk) [Cybersecurity](index=38&type=section&id=Cybersecurity) This section discusses the company's approach to managing cybersecurity risks and the board's oversight - The Company recognizes the critical importance of cybersecurity and maintains robust protection, with the board overseeing risks through quarterly updates from the Chief Operating Officer[198](index=198&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=38&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section provides a disclaimer about the forward-looking nature of certain statements and the inherent risks and uncertainties - The report contains forward-looking statements regarding retail expansion, product demand, competition, cash resources, and capital raising, which are based on current expectations and projections[199](index=199&type=chunk)[200](index=200&type=chunk) - Actual results may differ materially due to factors such as common stock price, customer acceptance, and federal/state regulations[201](index=201&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that quantitative and qualitative disclosures about market risk are not applicable to smaller reporting companies - Quantitative and qualitative disclosures about market risk are not applicable to smaller reporting companies[202](index=202&type=chunk) [ITEM 4. Controls and Procedures](index=38&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and internal control over financial reporting, identifying material weaknesses and outlining planned remediation efforts [Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports management's assessment of the effectiveness of the company's disclosure controls and procedures - Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the Company's disclosure controls and procedures were ineffective as of June 30, 2025[204](index=204&type=chunk) - Material weaknesses identified include lack of independent preparer and reviewer for journal entries, and ineffective design and implementation of Information Technology General Controls (ITGCs)[205](index=205&type=chunk) - ITGC weaknesses include virtually unlimited access to accounting and POS systems for multiple individuals, and ineffective controls over logical user access, physical security, change management, cybersecurity, and vendor management[205](index=205&type=chunk)[206](index=206&type=chunk) [Planned Remediation](index=40&type=section&id=Planned%20Remediation) This section outlines the steps management intends to take to address identified material weaknesses in internal controls - Management is working to improve controls, including establishing IT policies and procedures to mitigate data breaches, unauthorized access, and address segregation of duties, as well as reviewing key third-party service provider SOC reports[208](index=208&type=chunk) - Remediation will be considered complete only after controls operate for a sufficient period and are tested effectively[208](index=208&type=chunk) [Changes in Internal Controls over Financing Reporting](index=40&type=section&id=Changes%20in%20Internal%20Controls%20over%20Financing%20Reporting) This section describes any material changes in the company's internal control over financial reporting during the reporting period - Following the Spin-Off, new corporate and governance functions (finance, tax, treasury) have been implemented to meet standalone public company requirements[209](index=209&type=chunk) - The former parent continues to provide services under a transition services agreement, many using a shared technology platform[209](index=209&type=chunk) - Except for the material weaknesses noted, there were no significant changes in internal control over financial reporting during the quarter ended June 30, 2025[209](index=209&type=chunk) PART II - OTHER INFORMATION This section includes legal proceedings, risk factors, equity security sales, defaults, and other miscellaneous disclosures [ITEM 1. LEGAL PROCEEDINGS.](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) This section discloses ongoing legal proceedings, including a lawsuit against a subsidiary, and confirms that no other litigation is expected to have a material adverse effect on the Company's financial condition - A lawsuit was filed against Healthy Choice Markets IV, LLC on July 31, 2024, by a former employee alleging state and federal wage and hour law violations[211](index=211&type=chunk) - The Company believes the claims are without merit and does not anticipate a material adverse effect on its financial condition, results of operations, or cash flows if adversely resolved[211](index=211&type=chunk) [ITEM 1A. RISK FACTORS.](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS.) This section states that risk factors are not applicable to the Company - Risk Factors are not applicable[213](index=213&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) This section details the issuance of Class A common stock for debt conversion and the sale of Series A Convertible Preferred Stock, both exempt from registration requirements - For the six months ended June 30, 2025, the Company issued **2.75 million** shares of Class A common stock in exchange for **$1.3 million** of indebtedness, exempt under Section 3(a)(9) and/or Regulation D of the Securities Act[214](index=214&type=chunk) - On June 20, 2025, the Company sold **3,250** shares of Series A Convertible Preferred Stock for **$3.25 million**, convertible into **2.34 million** shares of Class A common stock, exempt under Section 4(a)(2) and Rule 506(b) of Regulation D[215](index=215&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES.](index=34&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) This section states that there have been no defaults upon senior securities - There have been no defaults upon senior securities[216](index=216&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES.](index=34&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This section states that mine safety disclosures are not applicable - Mine safety disclosures are not applicable[217](index=217&type=chunk) [ITEM 5. OTHER INFORMATION.](index=34&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) This section discloses the adoption of a Rule 10b5-1 trading arrangement by executive officers for the disposition of up to 2 million shares of common stock - In February 2025, executive officers adopted a Rule 10b5-1 trading arrangement, commencing in May 2025, covering the disposition of up to **2 million** shares of common stock over a twelve-month period[218](index=218&type=chunk) - No shares have been sold pursuant to these trading arrangements to date[218](index=218&type=chunk) [ITEM 6. EXHIBITS.](index=34&type=section&id=ITEM%206.%20EXHIBITS.) This section lists the exhibits filed with the Form 10-Q, including certifications, XBRL documents, and other required filings - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[220](index=220&type=chunk) - Interactive Data Files in Inline XBRL format (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104) are filed[220](index=220&type=chunk) [SIGNATURES](index=35&type=section&id=SIGNATURES) This section contains the signatures of the Company's Principal Executive Officer and Principal Financial Officer, certifying the report - The report is signed by Jeffrey Holman, Chief Executive Officer, and John Ollet, Chief Financial Officer, on August 14, 2025[224](index=224&type=chunk)
Healthy Choice Wellness Corp. Announces Record First Quarter 2025 Financial Results
GlobenewswireĀ· 2025-05-12 12:00
Core Insights - Healthy Choice Wellness Corp. reported record sales of $20.3 million for Q1 2025, a 27% increase compared to Q1 2024 [1][7] - The company achieved a gross profit of $7.9 million, reflecting a 30% year-over-year growth [1][7] - Positive adjusted EBITDA of $0.02 million was reported, marking a significant improvement from a loss of $0.2 million in the same period last year [1][7] Financial Performance - Net sales for Q1 2025 reached $20.3 million, up from $15.9 million in Q1 2024, representing an increase of approximately $4.4 million [6][7] - Gross profit increased by approximately $1.8 million, from $6.1 million in Q1 2024 to $7.9 million in Q1 2025 [6][7] - The net loss for Q1 2025 was approximately $0.7 million, unchanged from the prior year [7][8] Operational Highlights - The growth in revenue was attributed to successful acquisitions and same-store sales increases across all 19 stores [4] - The company emphasized improvements in buying efficiencies, which contributed to lower shrinkage and spoilage, enhancing gross profit [4] - The CEO expressed optimism about the company's expansion strategy and commitment to driving bottom-line profitability [4] Balance Sheet Overview - As of March 31, 2025, total assets were reported at $34.1 million, slightly down from $34.1 million at the end of 2024 [12] - Current liabilities increased to $13.4 million from $11.9 million at the end of 2024 [12] - Total stockholders' equity decreased to $2.1 million from $2.4 million at the end of 2024 [12] Company Background - Healthy Choice Wellness Corp. operates several subsidiaries focused on providing healthier lifestyle choices, including natural and organic grocery stores [17][18] - The company aims to leverage synergies across its brands to enhance shareholder value [4]
Healthy Choice Wellness Corp.(HCWC) - 2025 Q1 - Quarterly Report
2025-05-09 21:25
Financial Performance - Net sales increased by $4.4 million to $20.3 million for the three months ended March 31, 2025, compared to $15.9 million for the same period in 2024, driven by the acquisition of GreenAcres Market and a $0.7 million increase in same-store sales [160]. - Gross profit for the three months ended March 31, 2025, was $7.9 million, with a gross margin increase of approximately 0.7% compared to the same period in the prior year [160]. - Operating expenses rose to $8.3 million for the three months ended March 31, 2025, an increase of $1.6 million primarily due to the acquisition of GreenAcres Market and higher professional fees [161]. - The net loss for the three months ended March 31, 2025, was $0.7 million, slightly higher than the net loss of $0.7 million for the same period in 2024 [159]. - Adjusted EBITDA for the three months ended March 31, 2025, was $20,315, a significant improvement from an adjusted EBITDA of $(238,605) in the same period of 2024 [177]. Cash Flow and Financial Position - Cash provided by operating activities was approximately $1.1 million for the three months ended March 31, 2025, a significant improvement from a cash outflow of $2.5 million in the same period in 2024 [164]. - As of March 31, 2025, the company had cash of approximately $1.8 million and negative working capital of $2.4 million [156]. - The company has operating lease obligations totaling $13.3 million as of March 31, 2025, with an expected increase in rent expense due to new leases and variable payments [163]. Business Operations - The acquisition of GreenAcres Market in July 2024 contributed significantly to the increase in grocery sales and operating expenses [160][161]. - The company operates a total of 19 retail stores across Florida, New York, New Jersey, Virginia, Kansas, and Oklahoma, focusing on natural and organic products [157]. - The company does not consider its business to be seasonal, suggesting stable demand throughout the year [180]. Future Outlook and Risks - The company expects to continue incurring losses for the foreseeable future, indicating ongoing challenges in achieving profitability [169]. - Forward-looking statements include expectations regarding retail expansion and future product demand, highlighting strategic growth areas [182]. - The company acknowledges that actual results may differ from forward-looking statements due to various factors, including stock price and customer acceptance [184]. Cybersecurity - Cybersecurity is recognized as critical to the company's success, with ongoing evaluations of threats and their potential impacts on operations and financial condition [181]. - The board oversees cybersecurity risks through quarterly updates, emphasizing the importance of data protection in the company's strategy [181]. Accounting Policies - The company has not made material changes to its critical accounting policies compared to the 2024 Annual Report, ensuring consistency in financial reporting [179]. Expenses - Interest expense increased to $297,731 in Q1 2025 from $103,072 in Q1 2024, indicating higher borrowing costs [177]. - Depreciation and amortization expenses rose to $429,990 in Q1 2025, compared to $363,141 in Q1 2024, reflecting increased asset utilization [177].
Healthy Choice Wellness Corp. Completes Second Tranche of Debt-for-Equity Conversion
GlobeNewswire News RoomĀ· 2025-05-05 12:00
Core Insights - Healthy Choice Wellness Corp. has converted approximately $400,000 in outstanding debt into shares of its Class A common stock, further strengthening its balance sheet [1][2] - This transaction is part of a series of debt-for-equity exchanges totaling around $1.4 million over the past 60 days, executed at current market prices, indicating lender confidence in the company's growth [2][3] - The CEO emphasized that this conversion reflects strong support from lending partners and enhances the company's equity base while reducing liabilities, providing financial flexibility for strategic initiatives in the organic grocery sector [3][4] Company Overview - Healthy Choice Wellness Corp. operates through various subsidiaries, including Ada's Natural Market, Paradise Health & Nutrition, Mother Earth's Storehouse, Greens Natural Foods, Ellwood Thompson's, and GreenAcres Market, focusing on healthier nutrition and lifestyle alternatives [5][6] - The company also sells vitamins and supplements through its subsidiary, Healthy U Wholesale, and operates an online store [7]
Healthy Choice Wellness Corp. Announces Same-Store Sales Growth as Part of its Record First Quarter 2025 Sales and Gross Profit Performance
GlobenewswireĀ· 2025-04-14 12:15
Core Insights - Healthy Choice Wellness Corp. reported record first-quarter 2025 sales with positive same-store sales growth for the three months ended March 31, 2025 [1][2] - The company's overall sales increased to $20.3 million, up $4.4 million from the previous year, while same-store sales grew by 3% [3] Financial Performance - Gross profit for the first quarter of 2025 reached $7.9 million, an increase of $1.8 million compared to the same period last year [3] - The positive financial performance was attributed to the impact of the customer loyalty program and a focus on enhancing customer experience [2] Future Outlook - The company is excited about the potential of integrating AI to further personalize services and deepen understanding of customer needs [2]
Healthy Choice Wellness Corp. Announces Record First Quarter 2025 Sales and Gross Margin Performance
NewsfilterĀ· 2025-04-08 12:00
Core Insights - Healthy Choice Wellness Corp. (HCWC) reported exceptional first-quarter results for 2025, showcasing significant growth in sales and gross margin [1][2] - The company achieved a record $20.3 million in sales, reflecting a 28% year-over-year increase, and gross profit rose to approximately $7.9 million, marking a 30% year-over-year growth [3] Sales and Gross Margin Highlights - HCWC's sales growth of 28% resulted in a $1.9 million increase in gross profit, demonstrating the effectiveness of the company's strategic direction and operational efficiencies [2][3] - The gross profit increase of $1.8 million compared to the previous year indicates strong performance and commitment to delivering value to customers and shareholders [3] Strategic Outlook - The CEO expressed optimism about sustaining the positive growth trajectory through targeted acquisitions and operational efficiencies [2] - The company believes that its growth strategy, combined with favorable market dynamics, will support continued success throughout 2025 [2]
Healthy Choice Wellness Corp. Reports Fourth Quarter 2024 Financial Results and Full Year Fiscal 2024 Results
GlobenewswireĀ· 2025-03-31 13:00
Financial Performance - Fourth quarter sales reached $19.7 million, representing a 24% increase from $15.9 million in Q4 2023, with gross profit rising 42% to $8.1 million from $5.7 million [1][7] - For the full year 2024, sales totaled $69.4 million, a 25% increase compared to $55.7 million in 2023, with gross profit increasing by approximately $6.7 million to $27.1 million from $20.3 million [1][7] - The net loss from operations for Q4 2024 was reduced to $0.3 million, a significant improvement from a $7.4 million loss in Q4 2023, which included a $6.1 million non-cash goodwill write-off [7][8] - Adjusted EBITDA turned positive at $0.1 million for Q4 2024, improving by nearly $1.1 million from a loss of $0.95 million in Q4 2023 [7][9] - For the full year, the net loss from operations was approximately $1.8 million, down from a $10.5 million loss in 2023, with the previous year's loss also impacted by the goodwill write-off [7][8] Strategic Insights - The CEO of Healthy Choice Wellness Corp. highlighted the achievement of Adjusted EBITDA profitability in the first full quarter as a stand-alone company, emphasizing strategic investments for long-term impact [4] - The acquisition of GreenAcres Market has led to operational enhancements across all 19 stores, contributing to record revenue and improved efficiency [4] Balance Sheet Overview - As of December 31, 2024, total assets amounted to $34.1 million, up from $28.4 million in 2023, with current assets increasing to $9.7 million from $5.9 million [11] - Total liabilities rose to $31.7 million from $19.4 million in 2023, while total stockholders' equity decreased to $2.4 million from $9.0 million [11]
Healthy Choice Wellness Corp.(HCWC) - 2024 Q4 - Annual Report
2025-03-27 23:43
Financial Performance - Sales increased by $13.7 million to $69.4 million for the year ended December 31, 2024, compared to $55.7 million in 2023, primarily due to acquisitions[87] - The net loss for the year ended December 31, 2024, was $4.5 million, an improvement of $5.4 million compared to a net loss of $9.9 million in 2023[86] - The company reported a net loss of $4,506,466 for 2024, compared to a net loss of $9,932,620 in 2023, indicating an improvement in financial performance[114] - Adjusted EBITDA for 2024 was $(201,021), a significant improvement from $(2,988,254) in 2023, reflecting enhanced operational efficiency[114] Operating Expenses - Cost of goods sold rose by $5.4 million to $42.3 million in 2024, driven by full-year operations of acquired entities[88] - Total operating expenses decreased by $2.0 million from $30.9 million in 2023 to $28.8 million in 2024, with a significant reduction in goodwill impairment charges[89] - The company did not record any impairment of goodwill in 2024, compared to an impairment of $6,104,000 in 2023, suggesting improved asset valuation[114] - Depreciation and amortization expenses increased to $1,576,457 in 2024 from $1,431,815 in 2023, reflecting higher asset utilization[114] - The company recognized interest expense of $848,651 in 2024, up from $199,681 in 2023, indicating increased borrowing costs[114] - Other net expenses decreased slightly to $(8,552) in 2024 from $(16,230) in 2023, showing a reduction in miscellaneous costs[114] Cash Flow and Liquidity - Net cash used in operating activities was $3.1 million for 2024, compared to $2.5 million in 2023, reflecting ongoing operational challenges[93] - The company had cash of $2.1 million and negative working capital of $2.2 million as of December 31, 2024, indicating liquidity challenges[98] - The net cash used in investing activities was $5.0 million in 2024, primarily for the acquisition of GreenAcres Market[94] - Financing activities provided $8.7 million in cash for 2024, including proceeds from a loan agreement and an initial public offering[95] - The company plans to raise capital from outside investors to fund operating losses and further acquisitions[98] Business Operations - The company does not consider its business to be seasonal, indicating stable revenue expectations throughout the year[100] - The company applies ASC Topic 805 for business combinations, recognizing identifiable assets and liabilities at fair value on acquisition date[108] - Goodwill impairment reviews are conducted annually on September 30, or more frequently if necessary, to assess asset value[107] - Non-GAAP financial measures, such as Adjusted EBITDA, are used by management for planning and evaluating financial performance, but should not be viewed as substitutes for GAAP measures[110] Strategic Financial Maneuvers - The loss on debt extinguishment was $1,888,889 in 2024, with no such loss recorded in 2023, indicating a strategic financial maneuver[114]
Healthy Choice Wellness Provides Shareholder Update Highlighting Strategic Growth Drivers
GlobeNewswire News RoomĀ· 2025-03-12 12:15
Core Insights - Healthy Choice Wellness Corp. (HCWC) is focusing on operational efficiencies, new revenue streams, investment in leadership, and enhanced customer engagement to drive growth in 2025 [1][2]. Operational Efficiencies & Proven Retail Strategies - HCWC is implementing industry-leading retail strategies to optimize operations and enhance supply chain efficiencies, which are expected to improve scalability and profitability [2]. - The company anticipates that new tactics will generate a secondary revenue stream that could cover a significant portion of monthly operating expenses by the end of 2025 [2]. New Revenue Streams - HCWC is establishing in-house baking commissaries at various store banners, which will create new revenue and increase foot traffic [3]. - The company plans to launch a wholesale business to supply baked goods to local restaurants and businesses, reinforcing its commitment to local communities [3]. Investment in Leadership - HCWC has expanded its leadership team with key roles aimed at driving growth and operational efficiency, bringing a combined 35 years of industry experience [4][5]. Enhanced Customer Engagement & Loyalty Programs - The company is enhancing customer loyalty through unified rewards programs and targeted marketing campaigns, leveraging data-driven insights to improve promotional effectiveness [4].
Healthy Choice Wellness Launches Unified Rewards Program Across All BannersĀ 
GlobenewswireĀ· 2025-03-04 15:08
Core Insights - Healthy Choice Wellness Corp. (HCWC) has launched a revamped fully-integrated rewards program across all 19 stores to enhance customer engagement and retention [1][2] - The loyalty program aims to provide discounts, special pricing, and promotions, which are expected to drive incremental revenue and customer loyalty [2] Company Overview - HCWC operates 19 natural and organic grocery stores across six states, focusing on healthier daily choices in nutrition and lifestyle alternatives [3] - The company also sells vitamins, supplements, and health products through its subsidiary, Healthy U Wholesale, via its website [3] Loyalty Program Benefits - Studies indicate that loyalty program members generate 12-18% more incremental revenue compared to non-members, highlighting the potential for increased sales through enhanced customer engagement [2] - The unified loyalty program is designed to strengthen customer connections and drive measurable results for HCWC [2]