On November 7, 2023, PetIQ Inc (PETQ, Financial), a leading pet medication and wellness company, announced its financial results for the third quarter and nine months ended September 30, 2023. The company reported the highest third-quarter financial results in its history, with net sales increasing by 32% to $277.0 million, significantly above the company's guidance range of $220.0 million to $240.0 million. This performance was driven by robust growth in both the Products and Services segments.
Financial Performance Highlights
The Products segment saw a 36.0% increase in net sales, reaching $239.7 million, while the Services segment grew by 11.5% to $37.4 million. Gross profit for the quarter was up 43.0% to $72.6 million, and gross margin expanded by 200 basis points to 26.2%. Adjusted net income for the quarter was $12.6 million, a substantial increase from $0.8 million in the prior year period, with adjusted EPS at $0.42 compared to $0.03. EBITDA improved by 93.2% to $24.7 million, and adjusted EBITDA margin increased to 10.6%.
Operational and Strategic Developments
PetIQ Inc (PETQ, Financial) also announced a Services segment optimization initiative, which is expected to generate approximately $6.0 million in net cost savings over the next 12 months. The optimization includes the closure of 149 underperforming wellness centers, with 45 already closed in the third quarter and the remaining 104 expected to close in the fourth quarter of 2023.
"We believe our Services optimization will be executed swiftly in the fourth quarter of 2023 and result in a significantly stronger, more profitable segment that is better positioned for future growth," said Cord Christensen, PetIQ’s Chairman & CEO.
Balance Sheet and Cash Flow
PetIQ Inc (PETQ, Financial) ended the third quarter with $124.6 million in cash and cash equivalents. The company generated $50.3 million of cash from operations, driven by increased earnings and working capital benefits. Total debt stood at $447.9 million, and the company's net leverage ratio improved to 2.8x from 4.3x in the prior year period.
Outlook for 2023
With these strong results, PetIQ Inc (PETQ, Financial) is raising its full-year 2023 outlook, now expecting net sales of $1,060 million to $1,080 million and adjusted EBITDA of $99 million to $103 million, representing approximately 16.0% and 30.0% increases respectively, based on the mid-point of the guidance.
The company will host a conference call to discuss these results with the executive management team. For further details and to access the webcast, investors and media can visit the "Investors" section of the company's website at www.PetIQ.com.
For a detailed reconciliation of GAAP to non-GAAP financial measures, readers are encouraged to review the financial tables included in the earnings release.
As a leader in pet health and wellness, PetIQ Inc (PETQ, Financial) continues to focus on providing affordable and accessible veterinary products and services, with a commitment to helping pets live their best lives.
Explore the complete 8-K earnings release (here) from PetIQ Inc for further details.
