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PetMeds® Announces Its Fourth Quarter and Fiscal Year End Financial Results

DELRAY BEACH, Fla., June 11, 2024 (GLOBE NEWSWIRE) — PetMed Express, Inc. dba PetMeds and parent company of PetCareRx (NASDAQ: PETS) today announced its financial results for its fourth quarter and fiscal year ended March 31, 2024. 

Quarterly Highlights

Annual Highlights

“Our results were negatively impacted by a challenging macro environment and industry dynamics, as well as a slow down in call center response times due to the implementation of our new Order Management System and Autoship platforms during the fourth quarter,” said Sandra Campos, CEO & President. “We are moving swiftly to continue to improve our systems and processes to drive a better customer experience, along with investing in additional technology resources.”

“PetMeds and PetCareRx have been synonymous with delivering top-quality pet healthcare products for over two decades, addressing preventive care, chronic and acute medical needs for dogs, cats, and horses. Each year, millions of customers trust our integrated ecosystem of pet health and wellness products and services for the care of their beloved pets.”

Ms. Campos concluded, “Looking ahead to FY2025, our strategic priorities are focused on driving growth, improving profitability, and increasing our key customer satisfaction metrics. Consolidating business operations will simplify our structure, reduce cost and strengthen alignment across the organization. We will also sharpen and amplify our messaging with a comprehensive marketing plan and look to create efficiencies by leveraging investments in modern customized technology frameworks.”

This afternoon the Company will host a conference call to review the quarter’s financial results. 

Time: 4:30 P.M. Eastern Time, June 11, 2024
Public call dial in (877) 407-0789 (toll free) or (201) 689-8562. 
Webcast stream linkhttps://investors.petmeds.com for those who wish to stream the call via webcast. 
Replay: Available until June 25, 2024, at 11:59 P.M Eastern Time. 
To access the replay, call (844) 512-2921 (toll free) or (412) 317-6671 and enter passcode 13746751.

About PetMed Express, Inc.

Founded in 1996, PetMeds is a leader in pioneering the digital pet pharmacy industry. As a national online retailer, PetMeds.com and PetCareRx.com are top choices for delivering preventive and chronic symptom prescriptions and OTC medications and products through their thousands of veterinary partners and a loyal customer base. Leveraging telehealth and insurance partnerships, they offer value and convenience to pet families at every stage of their pets’ lives, whether dogs, cats, or horses. PetMeds and PetCareRx provide a comprehensive range of medications, food products, and essential supplies through their websites, www.PetMeds.com and www.PetCareRx.com.

Forward Looking Statement

This press release may contain “forward-looking statements”, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and uncertainties, including the Company’s ability to meet the objectives included in its business plan. Important factors that could cause results to differ materially from those indicated by such forward-looking statements are set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in the Company’s Annual Report on Form 10-K/A for the year ended March 31, 2023. The Company’s future results may also be impacted by other risk factors listed from time to time in the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and periodic filings on Form 8-K. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release and should not be relied upon as representing the Company’s views as of any subsequent date. The Company explicitly disclaims any obligation to update any forward-looking statements, other than as may be required by law. If the Company does update one or more forward-looking statements, no inference should be made that the Company will make additional updates with respect to those or other forward-looking statements.

Investor Contact:
ICR, LLC
John Mills
(646) 277-1254
Reed Anderson
(646) 277-1260
investor@petmeds.com

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share amounts) (Unaudited)
 
  March 31,
2024
  March 31,
2023
       
ASSETS      
       
Current assets:      
Cash and cash equivalents $ 55,296     $ 104,086  
Accounts receivable, less allowance for credit losses of $273 and $35, respectively   3,283       1,740  
Inventories   28,556       19,023  
Prepaid expenses and other current assets   6,325       4,719  
Prepaid income taxes   188       863  
Total current assets   93,648       130,431  
       
Noncurrent assets:      
Property and equipment, net   26,657       26,178  
Intangible and other assets, net   16,503       5,860  
Goodwill   26,658        
Operating lease right-of-use assets, net   1,432        
Deferred tax assets, net   4,986       5,009  
Total noncurrent assets   76,236       37,047  
       
Total assets $ 169,884     $ 167,478  
       
LIABILITIES AND SHAREHOLDERS’ EQUITY      
       
Current liabilities:      
Accounts payable $ 37,024     $ 25,208  
Sales tax payable   25,012       26,113  
Accrued expenses and other current liabilities   7,060       6,191  
Current operating lease liabilities   459        
Deferred revenue   2,603        
Total current liabilities   72,158       57,512  
       
Long-term operating lease liabilities   995        
       
Total liabilities   73,153       57,512  
       
Shareholders’ equity:      
Preferred stock, $.001 par value, 5,000,000 shares authorized; 2,500 convertible shares issued and outstanding with a liquidation preference of $4 per share   9       9  
Common stock, $.001 par value, 40,000,000 shares authorized; 21,148,692 and 21,084,302 shares issued and outstanding, respectively   21       21  
Additional paid-in capital   25,146       18,277  
Retained earnings   71,555       91,659  
       
Total shareholders’ equity   96,731       109,966  
       
Total liabilities and shareholders’ equity $ 169,884     $ 167,478  
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(In thousands, except for share and per share amounts) (Unaudited)
 
  Three Months Ended
March 31,
  Year Ended
March 31,
    2024       2023       2024       2023  
               
Net sales $ 66,504     $ 62,407     $ 281,064     $ 256,579  
Cost of sales   48,327       45,025       202,416       185,844  
               
Gross profit   18,177       17,382       78,648       70,735  
               
Operating expenses:              
General and administrative   14,148       12,045       55,246       41,714  
Advertising   5,969       4,555       24,508       19,424  
Depreciation and amortization   1,895       994       7,056       3,546  
Total operating expenses   22,012       17,594       86,810       64,684  
               
(Loss) income from operations   (3,835 )     (212 )     (8,162 )     6,051  
               
Other income:              
Interest income (expense), net   30       439       511       450  
Other, net   325       226       1,378       944  
Total other income (expense)   355       665       1,889       1,394  
               
(Loss) income before provision for income taxes   (3,480 )     453       (6,273 )     7,445  
               
Provision for income taxes   1,536       669       1,191       2,305  
               
Net (loss) income $ (5,016 )   $ (216 )   $ (7,464 )   $ 5,140  
               
Net (loss) income per common share:              
Basic $ (0.25 )   $ (0.01 )   $ (0.37 )   $ 0.25  
Diluted $ (0.25 )   $ (0.01 )   $ (0.37 )   $ 0.25  
               
Weighted average number of common shares outstanding:              
Basic   20,443,052       20,328,688       20,395,959       20,274,786  
Diluted   20,443,052       20,328,688       20,395,959       20,339,002  
               
Cash dividends declared per common share $     $ 0.30     $ 0.60     $ 1.20  
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
 
  Year Ended
March 31,
    2024       2023  
Cash flows from operating activities:      
Net (loss) income $ (7,464 )   $ 5,140  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:      
Depreciation and amortization   7,056       3,546  
Share based compensation   6,869       6,617  
Deferred income taxes   292       (1,630 )
Bad debt expense   324       214  
(Increase) decrease in operating assets and increase (decrease) in liabilities:      
Accounts receivable   (1,742 )     (41 )
Inventories   (6,417 )     13,432  
Prepaid income taxes   675       (182 )
Prepaid expenses and other current assets   (185 )     147  
Operating lease right-of-use assets, net   788        
Accounts payable   6,102       (2,292 )
Sales tax payable   (1,101 )     1,956  
Accrued expenses and other current liabilities   276       896  
Operating lease liabilities   (766 )      
Deferred revenue   (390 )      
Net cash provided by operating activities   4,318       27,803  
       
Cash flows from investing activities:      
Purchase of minority interest investment in Vetster   (300 )     (5,000 )
Acquisition of PetCareRx, net of cash acquired   (35,859 )      
Purchases of property and equipment   (4,511 )     (5,260 )
Net cash used in investing activities   (40,670 )     (10,260 )
       
Cash flows from financing activities:      
Dividends paid   (12,437 )     (24,537 )
Net cash used in financing activities   (12,437 )     (24,537 )
       
Net decrease in cash and cash equivalents   (48,789 )     (6,994 )
Cash and cash equivalents, at beginning of fiscal year   104,086       111,080  
       
Cash and cash equivalents, at end of fiscal year $ 55,296     $ 104,086  
       
Supplemental disclosure of cash flow information:      
       
Cash paid for income taxes $ 130     $ 4,312  
       
Dividends payable in accrued expenses $ 1,466     $ 1,262  
 

Non-GAAP Financial Measures

To provide investors and the market with additional information regarding our financial results, we have disclosed (see below) adjusted EBITDA, a non-GAAP financial measure that we calculate as net income excluding share-based compensation expense; depreciation and amortization; income tax provision; interest income (expense); and other non-operational expenses. We have provided reconciliations below of adjusted EBITDA to net income, the most directly comparable GAAP financial measures.

We have included adjusted EBITDA, herein, because it is a key measure used by our management and Board of Directors to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and other expenses. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

We believe it is useful to exclude non-cash charges, such as share-based compensation expense, depreciation and amortization from our adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision and interest income (expense), as neither are components of our core business operations. We also believe that it is useful to exclude other expenses, including the investment banking fee related to the Vetster partnership, acquisition costs related to PetCareRx, employee severance and an estimated state sales tax accrual as these items are not indicative of our ongoing operations. Adjusted EBITDA has limitations as a financial measure, and these non-GAAP measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

Because of these and other limitations, Adjusted EBITDA should only be considered as supplemental to, and alongside with other GAAP based financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results. The following table presents a reconciliation of net income, the most directly comparable GAAP measure to Adjusted EBITDA for each of the periods indicated:

Reconciliation of Unaudited Non-GAAP Measures
PetMed Express, Inc.
 
  Three Months Ended        
($ in thousands, except percentages) March 31,
2024
  March 31,
2023
  $
Change
  %
Change
               
Consolidated Reconciliation of GAAP Net Loss to Adjusted EBITDA:
               
Net loss $ (5,016 )   $ (216 )   $ (4,800 )   2222 %
               
Add (subtract):              
Share-based Compensation $ 1,674     $ 1,630     $ 44     3 %
Income Taxes $ 1,536     $ 669     $ 867     130 %
Depreciation and amortization $ 1,895     $ 994     $ 901     91 %
Interest Income $ (30 )   $ (439 )   $ 409     (93 )%
Acquisition/Partnership Transactions and Other Items $ 385     $ 1,010     $ (625 )   (62 )%
Employee Severance $ 104     $     $ 104     n/m  
Adjusted EBITDA $ 548     $ 3,648     $ (3,100 )   (85 )%
  Year Ended        
($ in thousands, except percentages) March 31,
2024
  March 31,
2023
  $
Change
  %
Change
               
Consolidated Reconciliation of GAAP Net (Loss) Income to Adjusted EBITDA:
               
Net (loss) income $ (7,464 )   $ 5,140     $ (12,604 )   (245 )%
               
Add (subtract):              
Share-based Compensation $ 6,870     $ 6,617     $ 253     4 %
Income Taxes $ 1,191     $ 2,305     $ (1,114 )   (48 )%
Depreciation and amortization $ 7,056     $ 3,546     $ 3,510     99 %
Interest Income $ (511 )   $ (450 )   $ (61 )   14 %
Acquisition/Partnership Transactions and Other Items $ 1,679     $ 1,904     $ (225 )   (12 )%
Employee Severance $ 512     $ 364     $ 148     41 %
Sales Tax Expense (Income) $ (1,088 )   $ 344     $ (1,432 )   (416 )%
Adjusted EBITDA $ 8,245     $ 19,770     $ (11,525 )   (58 )%

1 Adjusted EBITDA is a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.


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