Financial Data and Key Metrics Changes - The company reported revenue of $3.3 million for the fourth quarter, a 16% increase from $2.8 million in the same quarter last year [35] - Adjusted gross margin for the fourth quarter was 66.8%, up 12 points from 56.5% in the prior year quarter [35] - Net loss from continuing operations was $6.5 million, an improvement from $7.2 million a year ago [36] - Total cash on hand, including $8 million in escrow, was $44.4 million after paying off $28 million in debt [36][39] Business Line Data and Key Metrics Changes - The return to direct distribution positively impacted revenue for both cardiovascular and SimpliDerm product lines [35] - The company divested its BioEnvelope business, which generated $88 million, allowing for a focus on the NXT-41 product line [39] Market Data and Key Metrics Changes - The breast reconstruction market is valued at $1.5 billion, with 162,000 breasts reconstructed annually after mastectomy [11][12] - The company aims to address the 15%-20% postoperative infection rate in breast reconstruction patients, which is a significant market challenge [11][13] Company Strategy and Development Direction - The company is focused on solving the problem of postoperative infections in breast reconstruction through its NXT-41X product, which combines a biological matrix with sustained antibiotic release [11][24] - The strategic reset includes a focus on the NXT-41 product line, with plans for FDA submission and commercialization [39][41] - The company is exploring strategic options for SimpliDerm to concentrate resources on NXT-41X [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the NXT-41 product's potential to transform the market and emphasized the importance of addressing high infection rates in breast reconstruction [39][41] - The company is well-resourced with a strong balance sheet and a capable team, positioning it for future growth [41] Other Important Information - The company has been recognized as a Great Place to Work, which is expected to enhance its ability to attract talent and improve financial performance [32][33] - The company has a manufacturing facility capable of generating $120 million in revenue for NXT-41X [28] Q&A Session Summary Question: What kind of questions are you preparing for from the FDA regarding NXT-41? - Management indicated that they are preparing for questions related to biocompatibility and have retained supporting data for their application [45][46] Question: How quickly can you shift the filing to NXT-41X after NXT-41 approval? - Management stated that the plan is to transition efficiently from NXT-41 to NXT-41X, learning from the NXT-41 submission process [49] Question: How does SimpliDerm experience help with commercial readiness for NXT-41X? - Management highlighted that understanding the market and reimbursement processes, along with building relationships with key opinion leaders, are crucial for commercial readiness [51][53] Question: How do you think NXT-41X will compare in infection reduction to other techniques? - Management expressed confidence that NXT-41X could achieve significant infection reduction, emphasizing its advantages in uniform distribution and sustained antibiotic release [55][56]

Financial Data and Key Metrics Changes - Full-year revenue for 2025 was $121.6 million, representing a 5% increase from 2024 [7][16] - Q4 revenue was $29.5 million, a 3% decrease from Q3 and a 34% decline year-over-year [16] - Full-year swap volume reached $6.89 billion, a 21% increase from 2024, while Q4 swap volume was $1.59 billion, down 9% sequentially and down 32% year-over-year [16][17] - Revenue from staking nearly doubled to over $4 million, driven by improvements in Solana staking [17] Business Line Data and Key Metrics Changes - XO Swap, the B2B swaps platform, generated $416 million in Q4 volume, accounting for 26% of total quarterly volume [17] - Fiat onboarding revenue increased by 28% compared to 2024 [17] - Funded users at the end of the year were 1.7 million, down 6% from the previous quarter and 11% year-over-year [17] Market Data and Key Metrics Changes - The broader retail environment impacted the number of monthly active users, which declined to 1.5 million, down 35% year-over-year [18] - The decline in digital asset prices during Q4 affected overall revenue and trading activity [16][18] Company Strategy and Development Direction - The company is transitioning from a speculation-driven model to a payments-focused model, aiming to create revenue streams independent of cryptocurrency market fluctuations [7][14] - Exodus Pay is central to this strategy, designed to integrate various financial services into a single app, making it user-friendly and accessible [9][45] - The W3C acquisition is a key part of the vertical integration strategy, allowing the company to own the full payment stack and diversify revenue [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2025 but emphasized the importance of building infrastructure to reduce dependency on market conditions [5][14] - The company is optimistic about the future, with expectations that investments made in 2025 will start to yield results in 2026 [14] - AI is seen as a transformative factor, with potential to create a new class of customers needing wallet infrastructure [12] Other Important Information - The company is pausing Bitcoin dividend plans to prioritize M&A and growth initiatives [19] - The integration of AI tools is enhancing productivity within the engineering team [12] Q&A Session Summary Question: Can you expand on the steps needed for agentic payments? - Management discussed the need for secure wallet infrastructure to enable AI agents to transact, emphasizing user control over wallets and the importance of security measures [23][28] Question: What about the cost structure and one-time expenses in Q4? - Management noted legal costs and interest related to the Galaxy loan as part of the cost structure, with expectations for slightly lower costs moving forward [30][31] Question: What are the drivers behind improved monetization in XO Swap? - Management highlighted the growth in the number of partners and the expectation of continued growth in the B2B2C model, despite potential fluctuations in partner operations [35][36] Question: When will the next wave of XO Swap partners ramp up? - Management indicated steady growth and the anticipation of announcing significant new partners in the future, while emphasizing the integration timeline for partners [39][41] Question: How will capital be allocated for consumer-facing initiatives? - Management reiterated that Exodus Pay is an evolution of the company, focusing on consumer needs and aligning capital allocation with mainstream market demands [61][68]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported revenue of $397.6 million, a 17% year-over-year increase, with organic growth of 12% [19] - Adjusted EBITDA grew 53% year-over-year to $39.5 million, with margins expanding to 9.9% [22] - Full-year 2025 adjusted EBITDA was $115 million, exceeding previous guidance [25] - The company increased its cash balance to $66 million, up from $36 million in Q3 2025 [22] Business Line Data and Key Metrics Changes - The company served over 205,000 residents, a 10% increase year-over-year [19] - Script volume grew 14% year-over-year, with vaccine script volumes up 3% [19][20] - Gross profit rose 27% to $85.5 million, with gross margins expanding to 21.5% from 19.8% [19] Market Data and Key Metrics Changes - The company anticipates a revenue forecast of $1.4 billion to $1.42 billion for 2026, reflecting new pricing impacts from the IRA [26] - The long-term care pharmacy environment is evolving with ongoing consolidation and increasing operational complexity [13] Company Strategy and Development Direction - The company plans to continue investing in acquisitions and greenfield startups while enhancing data analytics capabilities [8] - The company aims to offset anticipated EBITDA impacts from the IRA and maintain service levels during industry transitions [12][11] - The focus remains on supporting partners with reliable execution amid industry changes [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth momentum despite industry challenges, raising 2026 adjusted EBITDA guidance to $120 million-$124 million [17][26] - The demographic shift with the aging population is expected to create incremental tailwinds for the company [13] - Management is closely monitoring the operational complexities introduced by the IRA [11] Other Important Information - The company completed three acquisitions mid-year, contributing to reported revenue growth of 18% for the full year [6] - The company achieved a full-year return on equity of 27% [8] Q&A Session Summary Question: Can you help us understand the durable aspects of Q4 results? - Management indicated that the run rate for EBITDA is approximately $110 million, with variability in Q4 not projected to continue [32] Question: Did the vaccine program contribute more this year than last year? - Management confirmed that the vaccine program continued to be significant in Q4, with improved profitability [34] Question: What progress has been made in balancing profit contributions between generics and branded drugs? - Management noted progress in aligning gross margin dollars with the high volume of generic prescriptions [36] Question: Is the gap between potential margin and realized margin still the same? - Management indicated that the gap has increased to approximately 90 basis points [37] Question: Can you discuss opportunities arising from competitors facing challenges? - Management acknowledged potential opportunities from competitors in distress, particularly in the context of ongoing bankruptcy processes [48] Question: Are you seeing efficiencies in labor costs? - Management stated that efficiencies are primarily due to scaling the existing platform rather than improvements in labor inflation [49] Question: How is the integration of recently acquired facilities progressing? - Management reported faster ramp-up and integration of recently acquired facilities, particularly in the Pacific Northwest [56] Question: What is the outlook for M&A opportunities given the current market conditions? - Management expressed a robust pipeline for M&A in 2026, while remaining disciplined in their approach [60]

Financial Data and Key Metrics Changes - In Q4 2025, net sales decreased by 2.4% to $1.52 billion, with comparable sales down 1.6% [9][10] - For the full year 2025, Adjusted EBITDA increased by 21.3% to $408 million, with a margin of 6.8% [8][9] - Operating cash flow rose by 77% year-over-year, contributing to a reduction in the leverage ratio from 4.2x to 3x [4][9] - Free cash flow improved by 276% to $187 million [9][12] Business Line Data and Key Metrics Changes - The company focused on moving away from unprofitable sales, resulting in a decline in total sales but improved profitability [10][12] - Gross margin rate expanded by 66 basis points to 38.7% for the full year 2025 [8] - Operating profit increased by $113 million, with operating margin expanding by 190 basis points [8] Market Data and Key Metrics Changes - The company ended 2025 with 1,382 stores in the U.S., following 25 net store closures in 2024 and 16 in 2025 [10] - The company expects net store closures between 15 and 20 in 2026, with closures weighted towards the latter half of the year [15] Company Strategy and Development Direction - The company is entering a new phase called "Reach for the Sky," focusing on sustainable top-line growth through four pillars: compelling product offerings, services at scale, trusted store experiences, and an integrated omni-channel model [18][19] - The strategy includes expanding the fresh food category, launching new national brands, and increasing the frequency of product drops [20][21][23] - The company aims to leverage its wholly owned services, including vet hospitals and grooming, as a key growth engine [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in starting 2026 from a position of strength despite a challenging macro environment [14] - The guidance for Q1 2026 anticipates net sales to be down 1% to flat, with Adjusted EBITDA expected between $92 million and $94 million [15][16] - Management emphasized that growth initiatives are designed to be self-help in nature, not reliant on favorable macro conditions [34] Other Important Information - The company has made significant progress in improving its economic model, focusing on profitability and cash generation [8][12] - The company plans to enhance its loyalty program and digital capabilities in 2026 [31][32] Q&A Session Questions and Answers Question: What will lead Petco's growth from here? - Management indicated that growth will come from all four pillars simultaneously, with product taking the longest to implement [37][39] Question: What are the drivers of the increase in gross margins? - Management highlighted the focus on pricing, promotions, and product mix as key levers for maintaining healthy margins [44][45] Question: How is the brand assortment evolving? - Management stated that the brand assortment is widening to cater to both premium and mainstream customers [52][54] Question: What percentage of customers engage in services? - Management noted that there is significant room for growth in services, particularly in vet hospitals and grooming [61][63] Question: How will the company capture customers who do not buy dog food? - Management emphasized the importance of cross-selling and leveraging customer data to increase sales among existing customers [66][67]

Financial Data and Key Metrics Changes - For the third fiscal quarter, the company reported revenue of $16.9 million, which is down from $18.9 million for the same period in the prior fiscal year and essentially the same as the second fiscal quarter of this fiscal year [13][19] - The revenue from commercial and U.S. government satellite programs was approximately $4.2 million, accounting for 25% of total revenue, compared to $11.2 million or 59% in the same period of the prior fiscal year [14] - Revenues from non-space U.S. government and Department of Defense customers were $12.5 million, representing 74% of consolidated revenue, up from 39% in the prior fiscal year [15] - Consolidated net income for the three months ended January 31, 2026, was approximately $1.6 million or $0.16 per share, compared to approximately $15.4 million or $1.60 per share for the same period of the previous fiscal year [20] Business Line Data and Key Metrics Changes - Revenue from satellite payload contracts was recognized primarily under the percentage of completion method and reported only in the FEI New York segment [15] - The company experienced a decrease in gross margin and gross margin rate due to a change in the mix of high-margin production satellite programs in the prior year versus lower-margin programs in the current period [16] - Selling, General, and Administrative (SG&A) expenses increased to approximately 21% of consolidated revenue, up from 18% in the prior year [17] Market Data and Key Metrics Changes - The company’s fully funded backlog at the end of January 2026 was approximately $83 million, a new all-time high, compared to approximately $70 million for the previous fiscal year [21] - The company anticipates that the new contracts announced will start to enter backlog in the current fiscal fourth quarter, contributing to the growth towards the $100 million backlog target [7][69] Company Strategy and Development Direction - The company is focusing on growth in large and growing end markets, including quantum sensing and proliferated satellites, alongside ongoing strength in space and defense businesses [3][4] - The management emphasized the importance of maintaining a balance between traditional and new business lines, expecting both to grow simultaneously [5] - The company is investing in R&D to keep its products at the state of the art, with plans to continue this investment in the future [18] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the current geopolitical climate, including the ongoing war, which has increased reliance on traditional defense technologies [9][11] - There is an expectation for strong opportunities in both traditional defense and next-generation modalities, particularly in alternative positioning, navigation, and timing systems [11][12] - The management expressed optimism about the future growth of the TURbO program, indicating significant revenue potential [34][35] Other Important Information - The company is debt-free and believes its liquidity is adequate to meet operating and investing needs for the next 12 months [23] - The company has already collected over $11 million of cash since February 1, 2026, which is expected to continue building through the quarter [22] Q&A Session Summary Question: Insights on proliferated constellation deals - The management noted success in winning contracts where they can provide a technical edge, but emphasized challenges in low-cost environments [26][27] Question: Details on the $45 million contracts - The management indicated both contracts are significant but did not disclose specific proportions [28][29] Question: Cost structure and operating expenses - The management explained that investments in Colorado are a significant part of current operating expenses, which should normalize over time [31][32] Question: Updates on the TURbO program - The management expressed increased optimism about TURbO, expecting significant revenue growth in the near future [34][35] Question: Clarification on proliferated satellites - The management described proliferated satellites as systems with many more satellites, typically in low Earth orbit, designed to be less costly and more rapidly produced [40][42] Question: Addressing GPS jamming and alternative navigation - The management discussed ongoing projects in magnetic navigation and other non-satellite alternatives to GPS, indicating government interest and funding for these technologies [88][90]

Financial Data and Key Metrics Changes - For the full year 2025, net operating income increased by more than 22% and adjusted EBITDA per share improved by 28% [8][18] - The company realized a 5.9% increase in revenue per occupied room (RevPOR) for Q4 compared to the same quarter in the prior year, with an annual growth of 8.8% [18][19] - Total portfolio NOI at share grew by 22% or $15 million on an annualized basis [21] Business Line Data and Key Metrics Changes - The same-store portfolio saw an additional 20 basis points of sequential occupancy gains in Q4, following a 90 basis point increase in Q3 [18] - The acquisition portfolio experienced a 680 basis point occupancy jump from 2024, with community NOI margin expanding by 550 basis points to 24.7% [19][21] - The 19 communities acquired in 2024 showed a sequential occupancy improvement of 290 basis points from Q3 to Q4, with total occupancy improving by 820 basis points year-over-year [9] Market Data and Key Metrics Changes - The company anticipates accelerated occupancy gains as the 19 communities from the 2024 acquisition cohort move into the same-store portfolio in 2026 [19] - The average annual rent renewal rate on in-place leases for the recent March 1 renewal was 7.9%, applicable to 96% of total same-store residents, up from 6.8% the previous year [25] Company Strategy and Development Direction - The company completed the acquisition of CNL Healthcare Properties for a total consideration of $1.8 billion, enhancing competitive positioning and growth profile [5][6] - Plans are in place to prune approximately 10% of the portfolio based on community count, focusing on recycling capital into higher growth, newer vintage assets [22][39] - The company aims to maintain a focus on delivering excellent clinical care and services while developing a labor model that rewards strong employees [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the merger's potential to drive improved performance trends and significant upside [10] - The company is targeting growth in revenue per occupied room at or above the same-store growth achieved in 2025 for the full year 2026 [8] - Management highlighted the importance of retaining and developing talent, with a focus on reducing employee turnover [16] Other Important Information - The company has committed to a new upsized $405 million revolver to increase available capital for investment opportunities [14] - The acquisition is expected to provide significant capital for reinvestment in both internal ROI projects and new acquisitions [13] Q&A Session Summary Question: Can you discuss the adjusted EBITDA and interest costs assumptions post-merger? - Management indicated that details will be provided in Q1, aiming for comparability with large-scale REIT reporters [37] Question: What is the timeline for pruning the 10% of the portfolio? - Management expects to make progress within a six to twelve-month timeline, with proceeds primarily used for deleveraging and reinvestment in higher quality assets [39] Question: Is the 16%-17% same-store NOI growth a good run rate number? - Management views this as a starting point for the new asset bucket, with further insights to be provided as normalized FFO metrics are released [40][41] Question: Is the 7.9% rate increase for the legacy pool or the current pool? - The rate increase is for the legacy pool that was implemented recently [46] Question: Will net lease assets be part of the dispositions this year? - Management stated there are no immediate plans to sell net lease assets but will evaluate market conditions for potential opportunities [49]

Financial Data and Key Metrics Changes - Total revenues for Q4 2025 were $38.9 million, up from $21.5 million in Q4 2024, primarily due to a technology transfer agreement with Merck [21] - For the full year 2025, revenue was $70.4 million compared to $59.3 million in 2024 [21] - Product gross margin for Q4 2025 was 64%, consistent with the full year 2025 gross margin, which also stood at 64%, up from 56% in the prior year [22] - Net income for Q4 2025 was $9.6 million, compared to a net loss of $10.4 million in Q4 2024; net loss for the full year 2025 was $44 million, improved from a loss of $65.3 million in 2024 [24][25] Business Line Data and Key Metrics Changes - The small molecule biocatalysis business returned to a healthy profit margin, with stabilization in revenue, supported by a robust pipeline of drugs in late-stage clinical studies [10] - The ECO Synthesis platform achieved significant milestones, including synthesizing 10 grams of commercially relevant siRNA and scaling production to 100 grams, with plans to reach half a kilo by the end of 2026 [6][7] Market Data and Key Metrics Changes - The total addressable annual market for production technologies in five years is estimated to be $2 billion, with a growing demand for siRNA medicines at a rate of 5%-10% per year [5] - The industry is projected to require 10-30 metric tons of oligonucleotide material by 2030, indicating a significant addressable market for the company [57] Company Strategy and Development Direction - The company is focused on establishing itself as a key technology provider in the RNA medicine market through its ECO Synthesis platform, which aims to address challenges in siRNA production [4][5] - Plans include scaling up production capabilities, achieving GMP certification, and expanding partnerships with CDMOs to enhance manufacturing processes [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the ECO Synthesis platform and the overall siRNA market, highlighting the importance of innovation and customer collaboration [12][28] - The company aims to demonstrate proof of success through new contracts and licensing deals in 2026, while maintaining a focus on financial performance and expense management [27][29] Other Important Information - The company ended 2025 with $78.2 million in cash equivalents, expected to fund operations and capital expenditures through the end of 2027 [25] - A restructuring charge of $3.4 million was recorded in Q4 2025 as part of efforts to reduce operating costs and improve gross margins [24] Q&A Session Summary Question: Potential value of stereoisomer control - Management is actively exploring the biological activity of stereo configurations and plans to present data at the TIDES USA meeting, with several customers interested in collaboration [31][32] Question: Understanding the recent deal process - The recent deal involved a small organization with a cardiovascular asset, highlighting the long-term discussions and mutual excitement about the ECO Synthesis platform's capabilities [35][39] Question: Details on the 50-gram contract - The initial agreement is for preclinical work, with expectations that successful data will lead to IND submissions and larger contracts for clinical trials [41][43] Question: Revenue guidance visibility - Management indicated a significant portion of the $72 million-$76 million revenue guidance is based on historical buying practices, though some estimates remain speculative at the beginning of the year [50][51] Question: Growth expectations for biocatalysis business - The small molecule biocatalysis business is expected to stabilize and continue to fuel growth, while higher growth rates are anticipated from the ECO side of the business [62][65]

Financial Data and Key Metrics Changes - In Q4 2025, net sales decreased by 2.4% to $1.52 billion, with comparable sales down 1.6% [9][10] - For the full year 2025, Adjusted EBITDA increased by 21.3% to $408 million, with a margin of 6.8% [8][9] - Operating cash flow rose by 77% year-over-year, contributing to a reduction in the leverage ratio from 4.2x to 3x [4][9] - Free cash flow improved by 276% to $187 million [9][12] Business Line Data and Key Metrics Changes - The company focused on moving away from unprofitable sales, resulting in a decline in total sales but improved profitability [10][12] - Gross margin rate expanded by 66 basis points to 38.7% for the full year 2025 [8] - Operating profit increased by $113 million, with an operating margin expansion of 190 basis points [8] Market Data and Key Metrics Changes - The company ended 2025 with 1,382 stores in the U.S., following 25 net store closures in 2024 and 16 in 2025 [10] - The company expects net store closures between 15 and 20 in 2026, with closures weighted towards the latter half of the year [15][16] Company Strategy and Development Direction - The company is entering a new phase called "Reach for the Sky," focusing on sustainable top-line growth through four pillars: compelling product offerings, services at scale, trusted store experiences, and an integrated omni-channel model [18][19] - The strategy includes expanding the fresh food category, launching new national brands, and increasing the frequency of product drops [20][21][24] - The company aims to leverage its wholly owned vet services as a key growth engine, with plans to optimize existing locations and expand in 2027 [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in starting 2026 from a position of strength despite a challenging macro environment [14] - The guidance for Q1 2026 anticipates net sales to be down 1% to flat, with Adjusted EBITDA expected between $92 million and $94 million [15][16] - Management emphasized that growth initiatives are designed to be self-help in nature, not reliant on favorable macro conditions [34] Other Important Information - The company has made significant progress in improving its economic model, focusing on profitability and cash generation [8][12] - The management team has undergone changes, with new leadership contributing to a transformative year [5][6] Q&A Session Summary Question: What will lead Petco's growth from here? - Management indicated that growth will come from all four pillars simultaneously, with product development taking the longest to implement [37][39] Question: What are the drivers of the increase in gross margins? - Management highlighted the focus on pricing, promotions, and product mix as key levers for maintaining healthy gross margins [44][45] Question: How is the brand assortment evolving? - Management stated that the brand strategy is widening to cater to both premium and mainstream customers, ensuring a diverse product offering [52][54] Question: What percentage of customers engage in services? - Management noted that there is significant room for growth in services, particularly in veterinary services, which are currently available in about 20% of stores [61][63] Question: How will the company capture customers who do not currently buy dog food? - Management emphasized the importance of cross-selling and leveraging customer data to increase sales among existing customers [66][67]

Financial Data and Key Metrics Changes - The company finished fiscal 2025 with total net sales of $155.1 million, an increase of 5.3% despite having 17 fewer stores than the previous year [11] - Comparable net sales for the fourth quarter increased by 10.1%, with physical stores and e-commerce contributing increases of 10.3% and 9.8% respectively [11] - Gross margin improved to 33.2% of net sales, an increase of 720 basis points compared to 26% last year [12] - Net income improved to $2.9 million or $0.10 per diluted share, compared to a net loss of $13.7 million or $0.45 per share last year [16] Business Line Data and Key Metrics Changes - Total net sales from physical stores increased by 3.6% despite a 7.1% reduction in store count, representing 72.3% of total net sales [12] - E-commerce net sales represented 27.7% of total net sales, up from 26.5% last year [12] - Product margins improved by 470 basis points due to higher initial markups and lower markdowns associated with reduced inventory [13] Market Data and Key Metrics Changes - The company experienced six consecutive months of positive comparable sales momentum, with 18 consecutive positive comp weeks [4] - February 2026 saw a comparable net sales increase of 20.1% compared to the same period in 2025 [17] Company Strategy and Development Direction - The company plans to open four to six new stores in fiscal 2026, shifting from a store closure strategy to a disciplined approach to growth [7] - Infrastructure investments and a price optimization tool have contributed to improved product margins and operational efficiencies [8] - The company is optimistic about its prospects for fiscal 2026, believing that the turnaround is real and fundamentals are fixed [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to sustain growth, although they acknowledged that macroeconomic conditions could impact discretionary retail spending [28] - The company expects further improvement in both top line and bottom line performance in each quarter of fiscal 2026 [10] - Management indicated that an annualized comparable net sales increase of approximately 8%-9% would be necessary to begin generating profitability for fiscal 2026 [19] Other Important Information - The company ended fiscal 2025 with total liquidity of $87.8 million, including cash of $46.3 million and no debt [16] - Total capital expenditures for fiscal 2025 were $4.7 million, down from $8.2 million in fiscal 2024 [16] Q&A Session Summary Question: Composition of strong comp for the fourth quarter - Management noted significant acceleration in comp sales from month to month, with strong performance across all departments and improved traffic [23] Question: What is driving higher traffic? - Management indicated strength across all categories, improved inventory levels, and effective marketing strategies as key drivers of higher traffic [25][26] Question: Path forward on store expansion - Management expressed confidence in unit economics and the ability to execute, while remaining cautious about the consumer spending environment [28] Question: CapEx for store expansion - Management expects CapEx to be in the range of $8 million-$9 million, with a focus on improving sales per square foot [29][43] Question: Assumptions for profitability outlook - Management clarified that an 8%-9% comp increase does not correlate to a proportionate increase in SG&A, and they expect to continue improving product margins [48]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported revenue of $397.6 million, a 17% year-over-year increase, with organic growth of 12% [15] - Adjusted EBITDA grew 53% year-over-year to $39.5 million, with margins expanding to 9.9% [18] - Full-year adjusted EBITDA for 2025 was $115 million, exceeding guidance [20] Business Line Data and Key Metrics Changes - The company served over 205,000 residents, a 10% increase year-over-year, with script volume growing 14% [15] - Vaccine script volumes increased by 3% year-over-year, contributing to improved profitability due to better purchasing and reimbursement [16] - Adjusted SG&A was 13% of revenue, down from 13.7% in the previous year, reflecting increased scale efficiencies [17] Market Data and Key Metrics Changes - The company anticipates continued pressure in the long-term care pharmacy ecosystem due to the IRA, but believes its scale and local service model will provide stability [10] - The demographic shift, with the first cohort of the "silver tsunami" entering their 80s, is expected to create a tailwind for the company [10] Company Strategy and Development Direction - The company plans to continue investing in acquisitions and greenfield startups while enhancing data analytics capabilities [6] - The focus remains on supporting partners with consistent, reliable execution amid industry changes [11] - The company is raising its 2026 adjusted EBITDA guidance to $120 million-$124 million, reflecting confidence in continued growth momentum [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in offsetting anticipated EBITDA impacts from the IRA in 2026 [9] - The company is closely monitoring operational complexities introduced by the IRA and aims to avoid disruptions to service levels and cash flow [10] - Management highlighted the importance of maintaining service continuity amid industry consolidation and operational changes [48] Other Important Information - The company increased its cash balance by approximately $60 million, reflecting strong cash generation [6] - Full-year return on equity was 27%, underscoring a disciplined approach to capital allocation [7] Q&A Session Summary Question: Can you help us understand what's durable, what's vaccine, and what's non-recurring in the quarter? - Management indicated that the run rate for adjusted EBITDA is approximately $110 million, with certain positive variabilities not projected to continue [25] Question: Did the vaccine program contribute more this year than last year? - Management confirmed that the vaccine program continued to be significant in Q4, with improved reimbursement contributing to profitability [27] Question: What were you able to get done from a contracting standpoint to better balance profit streams? - Management noted progress in aligning gross margin dollars with the high percentage of generic prescriptions dispensed [29] Question: Is the gap between potential margin and realized margin still what it was a couple of quarters ago? - Management reported that the gap has increased to approximately 90 basis points, reflecting ongoing investments for future profitability [30] Question: Can you discuss the opportunity around share gain with struggling competitors? - Management acknowledged potential opportunities arising from industry disruptions, including bankruptcy filings among competitors [41] Question: Are you seeing efficiencies and improvements in labor inflation? - Management indicated that efficiencies are primarily driven by scaling the existing labor force rather than improvements in labor inflation [42] Question: How do you ensure continuity of service amid operational changes? - Management emphasized that industry consolidation provides opportunities to maintain service and meet new operating groups [48]