Synergy CHC Corp. Q3 FY2025 earnings call

• Added Teresa Thompson to the Board of Directors; her experience from Costco will aid FOCUSfactor brand globally. - Hired Bob Anderson as Director of Direct Store Distribution (DSD) to build and optimize beverage distribution. - Beverage business: Secured major distribution wins including EG of America launching focus and energy beverages in over 1,600 convenience stores in Q4 2025, Wakefern Food Group carrying 5 SKUs, and partnerships with AlaBev and Atlantic Importing Company. - Supplement business: FOCUSfactor named #1 pharmacist recommended OTC memory supplement; expansions with Kroger in US (1,600 locations starting April 2026) and Uniprix in Canada (300 stores starting February 2026); first round of purchase orders from Costco Mexico for supplements, shipping in Q4 2025. - International expansion: Management to attend Middle East Organic Natural Products Expo in Dubai. - Closed a public offering in August, raising $4.4 million for working capital, retail rollouts, etc.

In the third quarter of 2025, net revenue was $8 million, up from $7.1 million in the year-ago quarter, representing a 12.4% increase. Beverage segment contributed $159,000 in revenue for the quarter. The supplement business had a price increase of 11% to its Costco business, with gross margin on supplements before the increase around 75% of gross revenue. Gross margin for the third quarter was 70.9% compared to 67.2% in the same quarter last year, driven by a favorable product mix shift. Operating expenses were $4.4 million vs $3.7 million y-o-y, primarily due to costs from being a public company and launching the beverage division. Income from operations was $1.28 million, up 21.8% from $1.05 million y-o-y.

• Expect to sign new DSD distribution partners rapidly. - Will add human capital (salespeople, service people) to support DSD distribution and accelerate RTD business in convenience stores.

Q: Can you give us some sense of what contribution there was in the quarter from the beverages?

A: So in the current quarter -- the third quarter was $159,000 of beverage revenue.

Q: Can you give me a little bit more color on the dynamics of the product mix? I mean, specifically, like what is the highest margin revenue source? And how high is that in order for the blended average to come out pretty high. I think it is the highest you've seen in a while, right?

A: Yes. So in our supplement business, we actually took a price increase to our Costco business of 11%, which I think our gross margin on our supplements on gross revenue is about 75% before. So it obviously increased that way. And our net -- our gross to net is about 11% of the difference. So we basically took about 11% increase in half of our business.