PetMed Express (NASDAQ:PETS) reported a wider full-year loss for fiscal 2026 as sales declined sharply, but management said the company made progress in the second half of the year on stabilizing its business, reducing costs and improving operations.
On the company’s fiscal fourth-quarter earnings call, Leslie C.G. Campbell, chairman, interim CEO and president, described fiscal 2026 as “a pivotal year” for the pet medication and health products retailer. She said full-year results reflected challenges faced earlier in the year, particularly in the first half, but pointed to signs of improvement in the back half of the fiscal year.
Fourth-Quarter Sales Decline, but Sequential Improvement
For the fiscal fourth quarter, PetMed reported net sales of $42.8 million, down from $50.8 million in the same period a year earlier, a decline of 15.6%. Doug Krulik, interim principal financial officer and chief accounting officer, said the decrease was primarily driven by lower prescription medication sales.
Despite the year-over-year decline, Krulik said the company saw “a modest sequential improvement from Q3,” driven by improvements in prescription medication and autoship sales. Campbell also noted that the quarter marked PetMed’s first sequential fourth-quarter net sales increase since fiscal 2024.
Gross profit for the quarter was $13.9 million, compared with $15.2 million a year earlier. As a percentage of sales, gross profit improved to 32.6% from 29.9%, a 270-basis-point increase. Krulik said the margin improvement was primarily tied to the settlement of the company’s New York sales tax liability.
General and administrative expenses fell 8.6% to $11.4 million from $12.5 million a year ago, which Krulik attributed to cost optimization efforts. Advertising expenses increased to $5.8 million from $5.4 million, driven by the presentation of co-op funds received from vendors during the quarter. Depreciation and amortization rose to $2.4 million from $2.1 million, reflecting continued investment in technology infrastructure.
PetMed reported a fourth-quarter net loss of $4.1 million, or $0.19 per diluted share, compared with a net loss of $11.6 million, or $0.56 per diluted share, in the prior-year period. Adjusted EBITDA loss was $2.8 million, compared with a loss of $1.9 million a year earlier.
Full-Year Results Reflect Impairment, Write-Downs and Lower Sales
For fiscal 2026, PetMed reported net sales of $179 million, down 21.1% from $227 million in the prior year. Krulik said the full-year sales decline was also primarily driven by lower prescription medication sales.
The company posted a full-year net loss of $57.3 million, or $2.74 per diluted share, compared with a net loss of $6.3 million, or $0.30 per diluted share, in fiscal 2025. Adjusted EBITDA for the year was negative $15.4 million, compared with positive $0.7 million in the prior year.
Management cited several factors behind the wider loss, including:
- A $26.7 million non-cash goodwill impairment charge reported in the first quarter.
- A $2.1 million wholesale inventory write-down reported in the third quarter related to an initiative management said was not part of the company’s core business.
- Lower gross profit resulting from reduced net sales.
- Higher general and administrative expenses tied in part to the non-recurrence of an $8.7 million one-time stock compensation reversal in fiscal 2025.
- $4.5 million in non-recurring legal, professional and executive severance costs related to a previously disclosed whistleblower investigation and related matters.
As of March 31, 2026, PetMed had $21.4 million in cash and cash equivalents and no debt, Krulik said.
Cost Reductions and Compliance Progress
Campbell said PetMed made progress during fiscal 2026 on regulatory compliance and internal controls. The company filed its fiscal 2025 Form 10-K in October, completed its fiscal 2026 first- and second-quarter filings in December, changed its external auditor to Baker Tilly US, LLP for the third quarter, and held its fiscal 2025 annual shareholder meeting in January.
She said the company also fully remediated three previously disclosed material weaknesses related to “tone at the top,” complex accounting issues and income taxes.
PetMed also exited underperforming vendor relationships in the second half of the year, which Campbell said are expected to generate approximately $6.1 million in annualized savings. The company also settled its New York State sales tax liability in the fourth quarter, resulting in a $2.8 million decrease to fiscal 2026 net loss.
Technology Investments and Strategic Priorities
Campbell said PetMed reorganized operations to improve productivity in its pharmacy, call center and distribution centers. She said customer-facing operational metrics improved and the company’s cost structure is now “lower and more aligned with the size of the business.”
The company completed several technology initiatives during the year, including implementation of a new ERP system, fraud prevention system and call center technology. Campbell said those projects modernized PetMed’s technology stack and would allow the company to focus more on website and user experience optimization while reducing operational risk.
Looking ahead to fiscal 2027, Campbell said PetMed will focus on customer retention, operational execution and expanding its market footprint through business-to-business relationships. She cited membership programs and white-label pharmacy fulfillment services, including a recently announced master services agreement with Rural King, as potential growth opportunities.
Board Rejects Unsolicited Acquisition Proposals
Campbell also addressed two unsolicited, publicly disclosed, non-binding preliminary proposals received in December 2025 to acquire all outstanding PetMed shares at prices ranging from $4 to $4.25 per share.
She said the board evaluated the proposals with financial and legal advisers and also solicited interest from other potential strategic and financial sponsors. After that process, the board determined it was in the best interest of the company and stockholders not to proceed with either proposal.
“PetMed is continuing to operate as an independent, publicly traded company,” Campbell said. She added that the board remains open to considering future inbound indications of interest and will evaluate any such proposals in accordance with its fiduciary duties.
Campbell closed the call by saying PetMed enters fiscal 2027 with a foundation built through “operational cleanup, cost optimization, technology modernization, and strategic partnerships.”
About PetMed Express (NASDAQ:PETS)
PetMed Express, Inc operates as an online and catalog-based pet pharmacy and retail supplier under the 1-800-PetMeds brand name. The company distributes prescription and non‐prescription medications, nutritional supplements, flea and tick control products, and a range of pet health supplies directly to consumers. Through its licensed veterinary pharmacy in Delray Beach, Florida, PetMed Express fills orders for dogs, cats and other companion animals, offering both branded and generic products alongside its own private‐label formulations.
Founded in 1996 by Marc Puleo, PetMed Express built its business on the premise of convenience and cost savings for pet owners seeking reliable access to veterinary medications.
