TAMPA, FLA. — On Nov. 13, Better Choice Company shared its third-quarter earnings for the three-month period ended Sept. 30, during which time it made incremental improvements toward profitability. The company continues to report losses in operations, earnings per share and adjusted EBITDA.
Better Choice reported net loss of $1.6 million, improved by 75% compared to year-ago losses, and operating loss of $2.6 million, an improvement of 59% year-over-year. Net sales grew by 24% from the second quarter to $13.1 million, reflecting an 11% increase year-over-year for revenue.
The company’s operating margin continues in the red at -20%, but improved by 3,403 basis points year-over-year in the third quarter. Adjusted EBITDA made progress over the quarter, reported as $-0.1 million but up 95% year-over-year. Earnings per share was also at a loss, at -$0.05, in the third quarter, but improved year-over-year by 77%, according to the company.
“The third quarter was highlighted by our organic digital growth,” said Kent Cunningham, who was appointed chief executive officer of Better Choice in May. “The year-to-date gross margin improvement was fueled by strategic pricing initiatives, and a 3% YOY improvement of average equivalized unit conversion and input costs in the first nine months of 2023.”
Of the company’s $13.1 million in net sales over the quarter, Better Choice’s Halo Holistic® portfolio drove 75% of sales. Revenue growth was attributed to gains at point-of-sale and an expanded digital presence for its brands, particularly with Halo Holistic’s plant-based vegan line for dogs driving share gains in the e-commerce space.
A recent co-manufacturing partnership with Alphia is expected to “secure continuity of dry kibble supply” for Better Choice. The company invested $5 million in Better Choice in June as part of a direct manufacturing partnership, in which Alphia will manufacture dry pet food products for its Halo brand.
The third-quarter also saw two innovation-focused announcements from Better Choice Company, one of which involves a partnership with Aimia Pet Health to develop GLP1 supplements to address weight-related health issues in pets. The company also announced it is exploring market expansion opportunities for Bona Vida, its pet CBD brand.
For the first nine months of fiscal 2023, Better Choice reported net loss of $8.1 million, improved by 46% year-over-year; operating loss of $8.5 million, improved by 42% year-over-year; earnings (loss) per share of -$0.26, an improvement of 48% year-over-year; and adjusted EBITDA of -$3.8 million, improved 47% year-over-year.
“We are focused on keeping product quality and continuous improvement initiatives at the forefront to fuel our future growth trajectory,” Cunningham added. “Our further continued focus on financial and operational discipline is reflected in the 95% Adjusted EBITDA growth during the quarter. We look to close out the remainder of 2023 with a solid footing to build digital momentum and enhanced brand awareness in 2024.”
Better Choice’s third-quarter earnings come on the heels of recent stumbling blocks for the company. For instance, the company was warned by the NYSE American LLC in late September stating it was not maintaining compliance with listing standards set by its Company Guide. As a result of Better Choice’s common stock trading at a low price per share for a “substantial” period of time, the NYSE American may delist Better Choice, or accelerate delisting action, if the company’s stock fails to demonstrate sustained improvements by March 21, 2024.
The company has also been challenged with profitability and supply chain disruptions throughout 2023.
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