DELRAY BEACH, Fla., Jan. 29, 2024 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (NASDAQ:PETS) (the "Company"), Your Trusted Pet Health ExpertTM will hold a conference call on Thursday, February 8, 2024 at 4:30pm Eastern time to discuss its financial results for the fiscal third quarter ended December 31, 2023. Financial results will be issued in a press release prior to the call. PetMeds' management will host the conference call, followed by a question and answer period. Date: Thursday, February 8, 2024Time: 4:3 ...

DELRAY BEACH, Fla., Jan. 8, 2024 /PRNewswire/ -- PetMed Express, Inc. ("PetMeds®") (NASDAQ: PETS), Your Trusted Pet Health Expert™, announces the appointment of Leslie C. G. Campbell as Chairman of the Board effective January 5, 2024, as part of the company's ongoing Board composition and succession planning. Leslie Campbell Ms. Campbell has served on PetMeds' Board since 2018 and will continue to serve as Chair of the Compensation Committee and a member of the Audit and Corporate Governance and Nominat ...

PetMed Express, Inc. (NASDAQ:PETS) Q2 2024 Results Conference Call October 30, 2023 4:30 PM ET Company Participants Brian Prenoveau - MZ Group, IR Matt Hulett - CEO and President Christine Chambers - CFO Conference Call Participants Ryan Meyers - Lake Street Capital Operator Good afternoon, everyone, and thank you for joining the PetMed Express Second Quarter Earnings Conference Call. My name is Shamali, the operator for today's call. I would now like to pass the conference over to our host, Mr. Brian Preno ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number: 000-28827 ________________________ PETMED EXPRESS, INC. (Exact name of registrant as specified in it ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides a comprehensive overview of the company's financial performance and position, including condensed financial statements and management's analysis [ITEM 1. CONDENSED FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20CONDENSED%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for Q2 2023, including balance sheets, income statements, cash flows, and detailed notes on accounting policies and acquisition impacts [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the unaudited condensed consolidated balance sheets, detailing assets, liabilities, and equity as of June 30, 2023, and March 31, 2023 Condensed Consolidated Balance Sheets (In thousands) | Item | June 30, 2023 | March 31, 2023 | Change ($) | Change (%) | | :--------------------------------------- | :------------ | :------------- | :--------- | :--------- | | Cash and cash equivalents | $61,534 | $104,086 | $(42,552) | (40.9)% | | Inventories - finished goods | $32,324 | $19,023 | $13,301 | 69.9% | | Total current assets | $105,830 | $131,451 | $(25,621) | (19.5)% | | Goodwill | $20,735 | $– | $20,735 | N/A | | Total assets | $180,737 | $164,117 | $16,620 | 10.1% | | Total current liabilities | $57,322 | $36,497 | $20,825 | 57.1% | | Total liabilities | $62,415 | $40,322 | $22,093 | 54.8% | | Retained earnings | $98,255 | $105,488 | $(7,233) | (6.9)% | | Total shareholders' equity | $118,322 | $123,795 | $(5,473) | (4.4)% | - The significant increase in **goodwill to $20,735 thousand** as of June 30, 2023, from zero at March 31, 2023, is a direct result of the PetCareRx acquisition[11](index=11&type=chunk) [Condensed Consolidated Statements of (Loss) Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20%28LOSS%29%20INCOME) This section presents the unaudited condensed consolidated statements of (loss) income for the three months ended June 30, 2023 and 2022 Condensed Consolidated Statements of (Loss) Income (In thousands, unaudited) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change ($) | Change (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Sales | $78,244 | $70,187 | $8,057 | 11.5% | | Cost of sales | $55,718 | $50,244 | $5,474 | 10.9% | | Gross profit | $22,526 | $19,943 | $2,583 | 13.0% | | Total operating expenses | $24,654 | $16,453 | $8,201 | 49.8% | | (Loss) income from operations | $(2,128) | $3,490 | $(5,618) | (161.0)% | | Net (loss) income | $(887) | $2,775 | $(3,662) | (132.0)% | | Basic Net (loss) income per common share | $(0.04) | $0.14 | $(0.18) | (128.6)% | | Diluted Net (loss) income per common share | $(0.04) | $0.14 | $(0.18) | (128.6)% | - Despite an **11.5% increase in sales**, the company reported a **net loss of $(887) thousand** for Q2 2023, a significant decline from $2,775 thousand net income in Q2 2022, primarily due to a **49.8% increase in total operating expenses**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section presents the unaudited condensed consolidated statements of cash flows for the three months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Cash Flows (In thousands, unaudited) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change ($) | Change (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $562 | $6,380 | $(5,818) | (91.2)% | | Net cash used in investing activities | $(37,012) | $(5,982) | $(31,030) | 518.7% | | Net cash used in financing activities | $(6,102) | $(6,064) | $(38) | 0.6% | | Net decrease in cash and cash equivalents | $(42,552) | $(5,666) | $(36,886) | 651.0% | | Cash and cash equivalents, at end of period | $61,534 | $105,414 | $(43,880) | (41.6)% | - The substantial increase in **cash used in investing activities to $(37,012) thousand** in Q2 2023, primarily due to the PetCareRx acquisition, led to a significant net decrease in cash and cash equivalents[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes explaining significant accounting policies, acquisition impacts, revenue recognition, and other financial disclosures [Note 1: Summary of Significant Accounting Policies](index=8&type=section&id=Note%201%3A%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's key accounting policies, including business combinations, goodwill, and intangible asset treatment - PetMed Express operates as a direct-to-consumer pet pharmacy and online provider of various pet products and services, with its fiscal year ending on March 31[18](index=18&type=chunk)[19](index=19&type=chunk) - The company accounts for business combinations using the acquisition method, allocating the purchase price to fair value of acquired assets and assumed liabilities, with any excess recorded as goodwill[21](index=21&type=chunk) - Goodwill is not amortized but tested for impairment annually on January 1, or more frequently if circumstances indicate impairment, and definite-lived intangible assets are amortized over 3 to 7 years[26](index=26&type=chunk)[27](index=27&type=chunk) [Note 2: Revenue Recognition](index=9&type=section&id=Note%202%3A%20Revenue%20Recognition) This note details the company's revenue recognition policies for product sales and membership fees, including a breakdown by category - Revenue is generated from selling prescription and non-prescription pet products, food, supplements, supplies, and veterinary services, with product revenue recognized at the point of shipment when control transfers to the customer[31](index=31&type=chunk)[32](index=32&type=chunk) - Membership fees, including PetPlus and partner programs, provide discounted pricing, free shipping, and telehealth services, with revenue recognized ratably over the membership term, typically one year for PetPlus[34](index=34&type=chunk)[96](index=96&type=chunk) Revenue Breakdown (In thousands) for Three Months Ended June 30 | Revenue Category | 2023 ($) | 2023 (%) | 2022 ($) | 2022 (%) | $ Variance | % Variance | | :--------------- | :------- | :------- | :------- | :------- | :--------- | :--------- | | Reorder sales | 68,038 | 87.0% | 63,339 | 90.2% | 4,699 | 7.4% | | New order sales | 7,820 | 10.0% | 6,848 | 9.8% | 972 | 14.2% | | Membership fees | 2,386 | 3.0% | – | –% | 2,386 | –% | | Total net sales | 78,244 | 100.0% | 70,187 | 100.0% | 8,057 | 11.5% | [Note 3: Acquisition](index=10&type=section&id=Note%203%3A%20Acquisition) This note provides details on the PetCareRx acquisition, including the purchase price, strategic rationale, and preliminary purchase price allocation - On April 3, 2023, the company acquired **100% of PetCareRx, Inc. for $36.1 million in cash**, significantly expanding its product catalog, especially non-medication products like food, and increasing distribution capabilities[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[104](index=104&type=chunk) - The acquisition resulted in the recognition of approximately **$20.7 million in preliminary goodwill**, representing synergies from an increased customer base, vendor relationships, a broader product catalog, and an assembled workforce[40](index=40&type=chunk) Purchase Price Allocation for PetCareRx Acquisition (In thousands) | Asset/Liability | Amount | | :--------------------------------------- | :----- | | Cash and cash equivalents | $220 | | Accounts receivable, net | $125 | | Other receivables | $506 | | Inventory | $3,116 | | Other current assets | $835 | | Property and equipment | $1,065 | | Deferred tax assets | $6,192 | | Goodwill | $20,735 | | Intangible assets, net | $12,300 | | Right of use assets | $2,220 | | **Total assets** | **$47,394** | | Accounts payable | $5,713 | | Accrued liabilities | $131 | | Deferred revenue | $2,993 | | Other current liabilities | $206 | | Lease liabilities | $2,272 | | **Total liabilities** | **$11,315** | | **Total purchase consideration** | **$36,079** | [Note 4: Net (Loss) Income Per Share](index=13&type=section&id=Note%204%3A%20Net%20%28Loss%29%20Income%20Per%20Share) This note presents the calculation of basic and diluted net (loss) income per common share, including anti-dilutive exclusions Net (Loss) Income Per Common Share (In thousands, except per share amounts) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Net (loss) income | $(887) | $2,775 | | Weighted average common shares outstanding (basic) | 20,333 | 20,208 | | Shares used in diluted computation | 20,333 | 20,291 | | Basic Net (loss) income per common share | $(0.04) | $0.14 | | Diluted Net (loss) income per common share | $(0.04) | $0.14 | - For the three months ended June 30, 2023, **418,386 shares** issuable upon vesting of restricted stock and **10,125 shares** issuable upon conversion of preferred shares were excluded from diluted EPS computation due to their anti-dilutive effect[49](index=49&type=chunk) [Note 5: Stock-Based Compensation](index=14&type=section&id=Note%205%3A%20Stock-Based%20Compensation) This note details stock-based compensation expense, unrecognized costs, and recent RSU and PSU grants to executives Stock-Based Compensation Expense (In millions) | Period | Compensation Expense | | :------------------------------- | :------------------- | | Three Months Ended June 30, 2023 | $1.8 | | Three Months Ended June 30, 2022 | $1.5 | - As of June 30, 2023, there was **$9.0 million of unrecognized compensation cost** related to non-vested restricted stock awards, expected to be recognized over the next one to three years[54](index=54&type=chunk) - In June 2023, the CFO was granted **11,750 RSUs and 8,000 PSUs**, with PSU vesting tied to the Company's Total Shareholder Return (TSR) relative to the S&P 600 Specialty Retail Index over a three-year performance period[53](index=53&type=chunk)[57](index=57&type=chunk) [Note 6: Fair Value](index=17&type=section&id=Note%206%3A%20Fair%20Value) This note defines fair value measurement and categorizes the company's cash and cash equivalents within the fair value hierarchy - The company's cash and cash equivalents, totaling **$61.5 million** at June 30, 2023, are primarily invested in money market funds and classified within Level 1 of the fair value hierarchy[64](index=64&type=chunk) - Fair value is defined as an exit price, determined based on assumptions market participants would use, and categorized into a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[63](index=63&type=chunk) [Note 7: Intangible and Other Assets, Net](index=17&type=section&id=Note%207%3A%20Intangible%20and%20Other%20Assets%2C%20Net) This note provides a breakdown of intangible and other assets, including those acquired from PetCareRx, and related amortization expense Intangible and Other Assets, Net (In thousands) | Asset Category | June 30, 2023 (Net Carrying Value) | March 31, 2023 (Net Carrying Value) | | :--------------------------------------- | :--------------------------------- | :---------------------------------- | | Toll-free telephone number | $375 | $375 | | Internet domain names | $485 | $485 | | Trade Names - PetCareRx | $2,600 | $– | | Customer Relationships - PetCareRx | $6,461 | $– | | Developed Technology - PetCareRx | $2,750 | $– | | Initial minority interest investment in Vetster | $5,000 | $5,000 | | **Total Intangible and Other Assets, Net** | **$17,671** | **$5,860** | - The PetCareRx acquisition introduced new indefinite-lived intangible assets (Trade Names - PetCareRx) and definite-lived assets (Customer Relationships, Developed Technology) which are being amortized over 3 to 7 years[65](index=65&type=chunk) - Amortization expense for intangible assets was **$0.5 million** for the three months ended June 30, 2023, compared to zero in the prior year, reflecting the newly acquired amortizable assets[65](index=65&type=chunk) [Note 8: Leases](index=19&type=section&id=Note%208%3A%20Leases) This note describes the company's operating lease activities, primarily from the PetCareRx acquisition, and related lease metrics - The company's leasing activities primarily consist of real estate operating leases acquired during the PetCareRx acquisition, with remaining maturity dates ranging from 2024 to 2027[69](index=69&type=chunk) Operating Lease Metrics (June 30, 2023) | Metric | Value | | :--------------------------------------- | :------ | | Weighted average remaining lease term | 3.4 years | | Weighted average discount rate | 6.6% | | Total lease cost (Q2 2023) | $229k | | Right-of-use assets obtained from acquisition | $2,220k | | Present value of lease liabilities | $2,030k | [Note 9: Commitments and Contingencies](index=20&type=section&id=Note%209%3A%20Commitments%20and%20Contingencies) This note outlines the company's policies for recording legal liabilities and discloses an increase in potential sales tax exposure - The company records liabilities for legal matters when a loss is probable and reasonably estimable, and reviews the status of significant matters periodically[78](index=78&type=chunk) - Following an evaluation of sales tax filings related to the Wayfair decision, the company recorded an increase of **$7.8 million** for potential sales tax exposure, split between current and long-term liabilities[79](index=79&type=chunk) [Note 10: Changes in Shareholders' Equity](index=21&type=section&id=Note%2010%3A%20Changes%20in%20Shareholders%27%20Equity) This note details changes in shareholders' equity, including the impact of net loss, dividends, and remaining share repurchase authorization Changes in Shareholders' Equity (In thousands) | Item | March 31, 2023 Balance | Q2 2023 Activity | June 30, 2023 Balance | | :------------------------------- | :--------------------- | :--------------- | :-------------------- | | Common Stock | $21 | $– | $21 | | Additional Paid-In Capital | $18,277 | $1,760 | $20,037 | | Retained Earnings | $105,488 | $(6,346) (Dividends) | $98,255 | | | | $(887) (Net Loss) | | | **Total** | **$123,786** | **$(5,473)** | **$118,313** | - Retained earnings decreased by **$7.233 million** in Q2 2023 due to a net loss of $(887) thousand and **$6.346 million** in dividends declared[80](index=80&type=chunk) - As of June 30, 2023, the company had approximately **$28.7 million** remaining under its share repurchase plan[80](index=80&type=chunk) [Note 11: Income Taxes](index=21&type=section&id=Note%2011%3A%20Income%20Taxes) This note explains the income tax (benefit) provision and effective tax rate, including the impact of acquired net operating losses Income Tax (Benefit) Provision and Effective Tax Rate | Period | Income Tax (Benefit) Provision (In millions) | Effective Tax Rate | | :------------------------------- | :--------------------------------------- | :----------------- | | Three Months Ended June 30, 2023 | $(0.1) | 11.5% | | Three Months Ended June 30, 2022 | $1.0 | 27.1% | - The decrease in tax provision and effective tax rate for Q2 2023 is primarily due to the utilization of net operating losses (NOLs) made available by the PetCareRx acquisition and other deductible expenses[81](index=81&type=chunk) - A Section 382 analysis following the PetCareRx acquisition limited the acquired net operating losses and disallowed interest expense from approximately **$96.0 million to $35.0 million**[83](index=83&type=chunk) [Note 12: Subsequent Events](index=22&type=section&id=Note%2012%3A%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including dividend declarations and RSU grants - On July 31, 2023, the Board of Directors declared a quarterly dividend of **$0.30 per share**, estimated to be approximately **$6.4 million**[84](index=84&type=chunk) - Subsequent to June 30, 2023, the Board approved and granted **2,500 Restricted Stock Units (RSUs)** to employees[84](index=84&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=23&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's analysis of financial condition and results of operations, covering key drivers, accounting policies, acquisition impacts, economic challenges, and liquidity for Q2 2023 [Executive Summary](index=23&type=section&id=Executive%20Summary) This section provides an overview of PetMed Express's business as a direct-to-consumer pet pharmacy, its expanded product line, and marketing strategies - PetMed Express is a leading direct-to-consumer pet pharmacy, offering a wide range of pet medications, food, and supplies, with its product line expanding to approximately **15,000 items**, including **10,000 from the PetCareRx acquisition**[89](index=89&type=chunk)[90](index=90&type=chunk) - The company markets through national advertising and social media to enhance brand recognition, drive website traffic, acquire new customers, and maximize repeat purchases[91](index=91&type=chunk) Average Purchase Value | Period | Average Purchase Value | | :------------------------------- | :--------------------- | | Quarter ended June 30, 2023 | $97 | | Quarter ended June 30, 2022 | $95 | [Critical Accounting Policies](index=23&type=section&id=Critical%20Accounting%20Policies) This section highlights key accounting policies requiring significant management judgment, including revenue recognition, business combinations, and income taxes - Key accounting policies requiring significant management judgment and estimates include revenue recognition (product sales at shipment, membership fees ratably), business combinations (acquisition method, fair value allocation, goodwill), use of estimates, and income taxes (deferred tax assets/liabilities, Section 382 analysis for NOLs)[92](index=92&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - The allowance for doubtful accounts was approximately **$38 thousand** at June 30, 2023, compared to $35 thousand at March 31, 2023, reflecting estimated losses from customer inability to pay[97](index=97&type=chunk) [Acquisition](index=25&type=section&id=Acquisition_MD%26A) This section details the strategic rationale and financial impact of the PetCareRx acquisition, including the valuation of acquired intangible assets - The acquisition of PetCareRx on April 3, 2023, for **$36.1 million in cash**, was a strategic move to expand product offerings and distribution capabilities[104](index=104&type=chunk) - Fair values of acquired intangible assets (trade name, customer relationships, developed technology) were estimated using discounted cash flow models, with a **discount rate of 12%**[105](index=105&type=chunk) [Economic Conditions, Challenges, and Risks](index=25&type=section&id=Economic%20Conditions%2C%20Challenges%2C%20and%20Risks) This section discusses the impact of macroeconomic factors such as inflation, interest rates, and supply chain disruptions on the company's operations - Macroeconomic factors such as inflation, increased interest rates, capital market volatility, and supply chain disruptions are impacting the company's operations, customer demand, and revenue growth rates[106](index=106&type=chunk) - These challenges are expected to continue affecting the company's operations for the remainder of fiscal 2024, making future consumer spending patterns difficult to forecast[106](index=106&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations_MD%26A) This section provides a detailed analysis of the company's sales, cost of sales, gross profit, and operating expenses for the reporting period [Sales](index=28&type=section&id=Sales) This section analyzes sales performance, including total net sales, new customer acquisition, and the contribution of the AutoShip program Sales Performance (In thousands) for Three Months Ended June 30 | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------- | :----- | :----- | :--------- | :--------- | | Total net sales | $78,244 | $70,187 | $8,057 | 11.5% | | New customers acquired | 86,000 | 69,000 | 17,000 | 24.6% | | AutoShip percentage of net sales | 48.7% | 33.9% | 14.8 pp | 43.7% | | Sales as % of annual sales | 27% | 29% | (2 pp) | (6.9)% | - Sales increased by **11.5%** due to incremental sales from the PetCareRx acquisition and growth in new PetMeds customers, despite declines in PetMeds reorder sales[116](index=116&type=chunk) - The AutoShip program's contribution to net sales significantly increased to **48.7%** in Q2 2023, up from 33.9% in the prior year, with a fiscal 2024 goal of **50% of PetMeds net sales**[118](index=118&type=chunk) [Cost of Sales](index=29&type=section&id=Cost%20of%20Sales) This section examines the cost of sales, its increase in line with sales volume, and its percentage of total sales Cost of Sales (In thousands) for Three Months Ended June 30 | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------- | :----- | :----- | :--------- | :--------- | | Cost of sales | $55,718 | $50,244 | $5,474 | 10.9% | | Cost of sales as % of sales | 71.2% | 71.6% | (0.4 pp) | (0.6)% | - Cost of sales increased by **10.9% to $55.7 million**, primarily driven by higher sales volume, while as a percentage of sales, it slightly decreased to **71.2%**[120](index=120&type=chunk) [Gross Profit](index=29&type=section&id=Gross%20Profit) This section analyzes the increase in gross profit and the improvement in gross profit percentage, driven by favorable rebates Gross Profit (In thousands) for Three Months Ended June 30 | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------- | :----- | :----- | :--------- | :--------- | | Gross profit | $22,526 | $19,943 | $2,583 | 13.0% | | Gross profit as % of sales | 28.8% | 28.4% | 0.4 pp | 1.4% | - Gross profit increased by **13.0% to $22.5 million**, and the gross profit percentage improved to **28.8%**, mainly due to favorable rebates resulting from the PetCareRx acquisition[121](index=121&type=chunk) [General and Administrative Expenses](index=29&type=section&id=General%20and%20Administrative%20Expenses) This section details the significant increase in general and administrative expenses, primarily due to payroll, professional fees, and acquisition-related costs General and Administrative Expenses (In thousands) for Three Months Ended June 30 | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------- | :----- | :----- | :--------- | :--------- | | G&A expenses | $15,711 | $9,351 | $6,360 | 68.0% | | G&A expenses as % of sales | 20.2% | 13.3% | 6.9 pp | 51.9% | - The **68.0% increase in G&A expenses to $15.7 million** was primarily driven by a **$3.3 million increase in payroll** (including stock compensation and severance), **$1.6 million in professional fees** (including acquisition costs), and higher software/systems and other overhead expenses related to the PetCareRx acquisition[122](index=122&type=chunk) [Advertising Expenses](index=29&type=section&id=Advertising%20Expenses) This section reviews advertising expenses, noting an increase in spend but a decrease in customer acquisition cost due to marketing efficiency Advertising Expenses (In thousands) for Three Months Ended June 30 | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------- | :----- | :----- | :--------- | :--------- | | Advertising expenses | $7,265 | $6,349 | $916 | 14.4% | | Advertising expenses as % of sales | 9.3% | 9.0% | 0.3 pp | 3.3% | | Customer acquisition cost | $84 | $91 | $(7) | (7.7)% | - Advertising expenses increased by **14.4%** due to higher media spend and agency fees, but the cost of acquiring a new customer decreased to **$84**, reflecting more efficient variable marketing and a broader product offering[123](index=123&type=chunk) [Depreciation and Amortization](index=29&type=section&id=Depreciation%20and%20Amortization) This section explains the substantial increase in depreciation and amortization expense, driven by new assets and acquired intangibles Depreciation and Amortization Expense (In thousands) for Three Months Ended June 30 | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------- | :----- | :----- | :--------- | :--------- | | D&A expense | $1,678 | $753 | $925 | 122.8% | | D&A expense as % of sales | 2.1% | 1.1% | 1.0 pp | 90.9% | - Depreciation and amortization expense more than doubled, increasing by **122.8% to $1.7 million**, primarily due to new property and equipment additions and the amortization of intangibles acquired from PetCareRx[125](index=125&type=chunk) [Other Income](index=30&type=section&id=Other%20Income) This section analyzes the significant increase in other income, primarily from higher interest income and rental income from the acquisition Other Income (In thousands) for Three Months Ended June 30 | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------- | :----- | :----- | :--------- | :--------- | | Total other income | $1,126 | $315 | $811 | 257.5% | | Total other income as % of sales | 1.4% | 0.4% | 1.0 pp | 250.0% | - Other income significantly increased to **$1.1 million**, primarily driven by higher interest income due to rising interest rates and increased rental income from PetCareRx[126](index=126&type=chunk) [Provision for Income Taxes](index=30&type=section&id=Provision%20for%20Income%20Taxes) This section details the income tax benefit recorded, primarily due to the utilization of net operating losses from the PetCareRx acquisition Income Tax (Benefit) Provision (In thousands) for Three Months Ended June 30 | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------- | :----- | :----- | :--------- | :--------- | | (Benefit) provision for income taxes | $(115) | $1,030 | $(1,145) | (111.2)% | | (Benefit) provision for income taxes as % of sales | (0.1)% | 1.4% | (1.5 pp) | (107.1)% | - The company recorded an income tax benefit of **$(0.1) million** for Q2 2023, a reversal from a $1.0 million provision in Q2 2022, primarily due to the utilization of net operating losses from the PetCareRx acquisition and deductible expenses[127](index=127&type=chunk) [Non-GAAP Financial Measures (Adjusted EBITDA)](index=26&type=section&id=Non-GAAP%20Financial%20Measures%20%28Adjusted%20EBITDA%29) This section reconciles GAAP net income to Adjusted EBITDA, explaining its use by management and the factors contributing to its decrease Reconciliation of GAAP Net Income to Adjusted EBITDA (In thousands) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change ($) | Change (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Net (loss) income | $(887) | $2,775 | $(3,662) | (132)% | | Add (subtract): | | | | | | Share-based Compensation | $1,760 | $1,536 | $224 | 15% | | Income Taxes | $(115) | $1,030 | $(1,145) | (111)% | | Depreciation and Amortization | $1,678 | $753 | $925 | 123% | | Interest (Income)/Expense | $(620) | $(117) | $(503) | 430% | | Acquisition/Partnership Transactions and Other Items | $1,126 | $355 | $771 | n/m | | Employee Severance | $393 | $– | $393 | n/m | | **Adjusted EBITDA** | **$3,335** | **$6,332** | **$(2,997)** | **(47)%** | - Adjusted EBITDA decreased by **47% to $3,335 thousand** in Q2 2023, reflecting the impact of increased operating expenses and acquisition-related costs, despite higher sales[115](index=115&type=chunk) - Adjusted EBITDA is used by management to evaluate operating performance by excluding non-cash charges (share-based compensation, D&A), income tax, interest, and other non-operational expenses like acquisition costs and severance[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity position, changes in working capital, cash flow activities, and capital allocation plans Liquidity and Cash Flow (In millions) | Metric | June 30, 2023 | March 31, 2023 | Change ($) | | :------------------------------- | :------------ | :------------- | :--------- | | Working capital | $48.5 | $95.0 | $(46.5) | | Net cash provided by operating activities (Q2) | $0.6 | N/A | N/A | | Net cash used in investing activities (Q2) | $(37.0) | N/A | N/A | | Net cash used in financing activities (Q2) | $(6.1) | N/A | N/A | - Working capital decreased significantly by **$46.4 million to $48.5 million**, primarily due to the **$36.1 million PetCareRx acquisition** and a **$10.2 million increase in inventory**[128](index=128&type=chunk) - The company has approximately **$28.7 million** remaining under its share repurchase plan and declared a **$0.30 per share quarterly dividend** on July 31, 2023[129](index=129&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=31&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section addresses the company's exposure to market risks, primarily interest rate risk affecting its cash and cash equivalents. The company manages this risk by investing in highly-liquid, short-maturity instruments and has no debt obligations or derivative financial instruments - The primary market risk for the company is interest rate risk, which impacts the return on its **$61.5 million** in cash and cash equivalents[131](index=131&type=chunk) - Cash and cash equivalents are managed within investment guidelines, primarily in federally-insured bank deposit accounts and highly-liquid investments with maturities of three months or less, to limit market risk[131](index=131&type=chunk) - The company has no debt obligations or derivative financial instruments, limiting its exposure to other market risks[131](index=131&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=31&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details the evaluation of the company's disclosure controls and procedures, confirming their effectiveness as of June 30, 2023. It also addresses the remediation of a previously identified material weakness in internal control over financial reporting related to segregation of duties [Evaluation of Disclosure Controls and Procedures](index=31&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2023, as concluded by management - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, subject to external audit testing[132](index=132&type=chunk) [Changes in Internal Control Over Financial Reporting](index=31&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports the remediation of a material weakness in internal control over financial reporting related to segregation of duties - A material weakness identified in the fiscal year 2023 Form 10-K, concerning a lack of segregation of duties over journal entries, has been fully remediated through increased resources and modified processes[134](index=134&type=chunk)[135](index=135&type=chunk) - Management believes the remediation plan has addressed the material weakness, subject to external audit testing, and there were no other material changes to internal control over financial reporting during the quarter[135](index=135&type=chunk)[136](index=136&type=chunk) [PART II - OTHER INFORMATION](index=33&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=33&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section states that the company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[140](index=140&type=chunk) [ITEM 1A. RISK FACTORS](index=33&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section confirms that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023 - There have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended March 31, 2023[141](index=141&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=33&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section indicates that there were no unregistered sales of equity securities or use of proceeds during the reporting period - No unregistered sales of equity securities or use of proceeds occurred during the three months ended June 30, 2023[142](index=142&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=33&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred during the three months ended June 30, 2023[143](index=143&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=33&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[144](index=144&type=chunk) [ITEM 5. OTHER INFORMATION](index=33&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section reports that no director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2023 - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023[145](index=145&type=chunk) [ITEM 6. EXHIBITS](index=33&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including certifications from executive officers, material contracts, and various Inline XBRL documents - The exhibits include certifications of the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1) as required by the Securities Exchange Act and Sarbanes-Oxley Act[149](index=149&type=chunk) - Material contracts, such as Restricted Stock Agreements, are incorporated by reference[148](index=148&type=chunk)[149](index=149&type=chunk) - Inline XBRL documents, including the Instance Document, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents, are filed[150](index=150&type=chunk)

NASDAQ: PETS Safe Harbor & Non-GAAP Measures PetMeds cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made. PetMeds undertakes no duty to update publicly any forward-looking statement that it may make, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority. 2 3 MISSION Additional products, higher LTV, expanded dist ...

Financial Data and Key Metrics - Revenue for Q1 2024 was $78 million, an 11% YoY increase compared to $70 million in Q1 2023, driven by the acquisition of PetCareRx and stabilization of the core PetMed business [40][45] - Gross profit margin improved to 28.8% in Q1 2024, up from 28.4% in Q1 2023 and 27.9% in the prior quarter [22] - Adjusted EBITDA for Q1 2024 was $3.3 million, down from $6.3 million in Q1 2023, primarily due to higher operating expenses and advertising costs [23] - Reorder sales grew 7% YoY to $68 million, representing 87% of total revenue [15][21] - Net loss for Q1 2024 was $0.9 million, or $0.04 per diluted share, compared to net income of $2.8 million, or $0.14 per diluted share, in Q1 2023 [47] Business Line Performance - The company added 86,000 new customers in Q1 2024, a 25% YoY increase, marking the third consecutive quarter of net new customer growth [16][21] - Recurring revenue, including AutoShip and PetCareRx membership programs, accounted for 49% of total revenue, up from 34% in Q1 2023 [41][46] - The integration of PetCareRx has expanded the product catalog, particularly in consumables like Purina's prescription food line, which is now available to PetMed customers [11][36] Market and Strategic Direction - The company is transitioning from a pet medication retailer to a comprehensive pet healthcare provider, focusing on four key pillars: medication, care, nutrition, and wellness [42][44] - PetMed is leveraging its partnership with Vetster to offer telemedicine services in over 25 states, with plans to expand to Arizona, Florida, Colorado, and California by Q4 2023 [43] - The company is launching a pet insurance product in partnership with Pumpkin Insurance, targeting the underpenetrated pet insurance market, which currently covers less than 5% of the pet population [17][19] Management Commentary - Management highlighted the successful integration of PetCareRx, which has improved supplier terms and direct manufacturing relationships, driving synergies and margin improvements [22][37] - The company is focused on achieving operating leverage by scaling revenue while maintaining stable fixed costs, with a goal of delivering sustainable long-term growth and profitability [26][51] - Management emphasized the importance of customer lifetime value (LTV) over average order value (AOV) as a key metric for success, particularly as the company expands its product offerings [68] Other Key Information - The company ended Q1 2024 with $61.5 million in cash and no debt, despite paying $63 million for the PetCareRx acquisition [48] - A $0.30 cash dividend was declared in June 2023, consistent with prior quarters, though management noted potential future shifts in capital allocation toward growth investments [48][77] Q&A Session Summary Question: What was the revenue contribution from the legacy PetMed business excluding PetCareRx? - The company did not provide a specific breakdown but noted that the legacy PetMed business experienced YoY growth on a standalone basis [65][66] Question: How is the stabilization of the returning customer base progressing? - The returning customer base for the legacy PetMed business showed a slight decline but is stabilizing, with reorder sales growing 7% YoY on a consolidated basis [57][74] Question: What are the expected synergies from the PetCareRx acquisition? - Synergies are expected to improve SG&A as a percentage of revenue, with gross margins remaining stable across both businesses [75] Question: What is the outlook for the dividend? - Management is balancing the need for capital to fuel growth opportunities with dividend payments, suggesting potential future shifts in capital allocation [77]

PetMed Express, Inc. (NASDAQ:PETS) Q1 2022 Earnings Conference Call July 26, 2021 8:30 AM ET Company Participants Bruce Rosenbloom - Chief Financial Officer Gian Fulgoni - Chairman of the Board Conference Call Participants Ben Rose - Battle Road Research Erin Wright - Credit Suisse Anthony Lebiedzinski - Sidoti & Company Operator Welcome to the 1-800-PetMeds Conference Call to Review the Financial Results for the First Fiscal Quarter ended on June 30, 2021. At the request of the Company, this conference cal ...

Financial Data and Key Metrics Changes - For the first quarter of fiscal 2023, sales were $70.2 million, a decrease of 11.5% compared to $79.3 million for the same period last year [22][40] - Net income was $2.8 million or $0.14 diluted earnings per share, down from $4.4 million or $0.22 diluted earnings per share year-over-year [61] - Adjusted EBITDA for the first quarter was $6.3 million, or $0.31 on a diluted basis, compared to $7.1 million or $0.35 on a diluted basis for the same quarter last year [61] Business Line Data and Key Metrics Changes - Reorder sales decreased by 7.8% to $63.3 million for the quarter ended June 30, 2022, compared to $68.7 million for the same quarter the prior year [40] - The AutoShip subscription program saw an increase in adoption, with approximately 34% of revenue derived from this program during the June quarter [51][57] Market Data and Key Metrics Changes - The total U.S. pet market is over $100 billion in annual sales and is expected to reach $120 billion by 2024, with the addressable pet medication market at approximately $10 billion [25] - The company operates in a resilient market, with pet ownership in U.S. households increasing over time, currently at seven out of ten households [34] Company Strategy and Development Direction - The company is transitioning from a focus on existing customers to also generating new customer acquisition, particularly through the AutoShip program and telemedicine initiatives [50][64] - A strategic partnership with Vetster aims to enhance telemedicine capabilities, integrating virtual vet services into the company's offerings [26][45] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a slow start to the flea and tick season due to colder temperatures but noted a rebound in sales as temperatures warmed [2][70] - The company remains optimistic about new customer acquisition initiatives and expects improvements in the upcoming quarters [88] Other Important Information - The company has a strong balance sheet with approximately $105.4 million in cash and cash equivalents and no debt as of June 30, 2022 [9][43] - The Board of Directors declared a quarterly dividend of $0.30 per share, payable on August 19, 2022 [15] Q&A Session Summary Question: What does the seasonal mix look like this year compared to historical trends? - Management noted a slow start to the quarter but observed a rebound in sales through May and June, indicating recovery in the parasiticide business [70] Question: How is the company addressing customer behavior in a tougher macro backdrop? - Management indicated that brand loyalty remains strong, with minimal evidence of customers trading down in prescription medications [84][85] Question: Can you provide details on new customer growth for the quarter? - The company reported acquiring approximately 69,000 new customers during the quarter [86] Question: How is the inventory situation given ongoing supply chain issues? - Management stated that inventory levels are normalized and that direct relationships with manufacturers help mitigate supply chain concerns [110]

Financial Data and Key Metrics Changes - Second quarter sales were $65.4 million, a decrease of 3% compared to $67.4 million in the same period last year [35] - Adjusted EBITDA was $7.1 million, down from $9.8 million year-over-year [38] - Net income was $2.6 million or $0.13 per diluted share, compared to $6.3 million or $0.31 per diluted share for the same quarter last year [37] - Gross profit as a percentage of sales was 28.2%, a decline of 20 basis points year-over-year [37] - Cash and cash equivalents were approximately $96.5 million, with no debt as of September 30, 2022 [41] Business Line Data and Key Metrics Changes - Repeat sales for the quarter were $59.7 million, a decrease of 1.5% compared to $60.6 million in the same period last year [36] - AutoShip & Save sales as a percentage of total sales increased to 39%, a 15% sequential increase from the previous quarter [36][21] - New customer count for the quarter was approximately 61,000, down from 69,000 in the prior quarter [36] Market Data and Key Metrics Changes - The U.S. pet market is over $120 billion in sales, with the addressable pet medication market exceeding $10 billion [23] - The pet healthcare industry is experiencing a shift towards digital services, with increasing demand for online purchasing [26][27] Company Strategy and Development Direction - The company is transitioning from a leading pet medication retailer to a pet health expert, focusing on digital transformation and expanding its service offerings [5][12] - The strategy includes enhancing the product catalog, particularly in nutrition and consumables, to increase customer lifetime value (LTV) [21][30] - The company aims to leverage its strong brand and market position to capture a larger share of the growing pet healthcare market [14][25] Management's Comments on Operating Environment and Future Outlook - Management noted a solid rebound in business during the second fiscal quarter due to warmer temperatures, which stimulated demand for flea and tick and heartworm medications [7] - The company is optimistic about the future, emphasizing the importance of digital transformation in pet healthcare [12][27] - Management highlighted the resilience of the pet care market, even during recessionary times, as pet parents prioritize spending on their pets [25] Other Important Information - The company has approximately $34 million in inventory, with higher levels attributed to the timing of inventory purchases [41] - A quarterly dividend of $0.30 per share was approved, to be paid on November 30, 2022 [41] Q&A Session Summary Question: Expansion of customer LTV initiatives - Management discussed the importance of expanding the product assortment and increasing LTV to CAC ratio, with a focus on growing the AutoShip program and adding more consumables [45][46] Question: Advertising spend and efficiency - Management indicated that advertising spend was flat year-over-year, with a focus on balancing awareness and performance marketing to improve efficiency [48] Question: Expanded product selection and SKU goals - Management stated there is no specific SKU goal but emphasized the importance of adding premium brands and improving sales capabilities outside of medications [52][53] Question: Impact of political ad campaigning on advertising efficiency - Management noted no significant impact from political ad campaigning on their advertising efficiency, although the current quarter is typically slower due to seasonality [55] Question: G&A expenses growth rate - Management explained that G&A expenses have increased due to strategic investments in people and technology, with expectations for continued investment to support growth [57][58]