FitLife Brands outlines $120M+ combined revenue target following Irwin Naturals acquisition

Earnings Call Insights: FitLife Brands (FTLF) Q2 2025

MANAGEMENT VIEW

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CEO Dayton Robert Judd opened by reporting a 5% year-over-year revenue decline to $16.1 million for Q2 2025, noting that online sales accounted for $10.4 million or 65% of total revenue. Gross profit fell 9% and gross margin decreased to 42.8%. Net income was $1.7 million, down from $2.6 million in the prior year, with the decline primarily attributed to elevated M&A expenses related to the acquisition of Irwin Naturals, which closed after quarter-end. "Net debt was $4.3 million, which is equivalent to approximately 0.3x the company's adjusted EBITDA," stated Judd.

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The company highlighted strong performance in Legacy FitLife, with total revenue of $7.3 million, a 7% increase, driven by a 17% increase in online sales. However, the MRC segment struggled, with revenue down 16% and a gross margin decline attributed to tariffs and product mix challenges. MusclePharm saw total revenue decline 4%, with both wholesale and online channels affected and gross margin dropping to 30.8%.

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Judd detailed the Irwin Naturals acquisition, explaining, "We have been working on the Irwin transaction for more than a year...acquiring a claim from a creditor, submitting its own plan of reorganization for Irwin and then ultimately participating in an organized sale process and becoming the stocking horse bidder for the assets." He noted the deal followed Irwin's unsuccessful expansion into ketamine clinics and subsequent bankruptcy, but emphasized the strength of Irwin's core nutritional supplement brand and its distribution network.

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For Irwin Naturals, Judd stated, "For the trailing 12 months as of June 30, 2025, adjusting for the loss of distribution in Costco U.S. stores in early 2025, Irwin generated revenue of approximately $60 million at a gross margin of approximately 35%." He projected, "For the first full year of operations, we expect the combined FitLife and Irwin businesses to generate in excess of $120 million of revenue and adjusted EBITDA of between $20 million to $25 million."

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Ryan Hansen, EVP, highlighted the launch of the new MusclePharm Pro Series in Vitamin Shoppe stores and its expansion to online and international wholesale partners.

OUTLOOK

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Judd shared, "We are hopeful, we're optimistic that we can still deliver some organic revenue growth in 2025, although we also acknowledge that the challenges we've had with Dr. Tobias have kind of not been ideal here for the first half of the year."

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For the combined business, Judd indicated, "We expect the combined FitLife and Irwin businesses to generate in excess of $120 million of revenue and adjusted EBITDA of between $20 million to $25 million."

FINANCIAL RESULTS

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Total revenue for Q2 2025 was $16.1 million, down 5% year-over-year. Online sales were $10.4 million. Gross profit fell 9%, and gross margin declined to 42.8%. Contribution was $5.7 million, down 9%. Net income was $1.7 million. Basic EPS was $0.19, diluted EPS was $0.18. Adjusted EBITDA was $3.3 million, a 13% decrease. The company ended the quarter with $10.9 million in term loans, $6.6 million in cash, and net debt of $4.3 million.

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Legacy FitLife revenue was $7.3 million; MRC revenue was $6.3 million, down 16%. MusclePharm revenue declined 4%. The company cited targeted promotional investments and ongoing challenges in the Dr. Tobias brand and MRC skin care brands.

Q&A

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Ryan Robert Meyers, Lake Street Capital Markets: Asked about growth rates for organic business in the second half. Judd responded, "We're hopeful, we're optimistic that we can still deliver some organic revenue growth in 2025, although we also acknowledge that the challenges we've had with Dr. Tobias have kind of not been ideal here for the first half of the year."

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Meyers asked about blended gross margins post-Irwin acquisition. Judd explained, "If you just do the math, since the businesses are roughly equivalent sizes, yes, you're in the high 30s."

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Meyers inquired about revenue synergies. Judd mentioned, "They don't sell anything online or I should say, on Amazon, they sell on their own websites. We will -- just like we did with the MusclePharm transaction, we will internalize that. So we will help them grow online revenue."

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Sean Patrick McGowan, ROTH Capital Partners: Asked about Irwin's seasonality and SG&A. Judd explained, "The general trend is comparable, but the magnitude is maybe not as much," and confirmed plans to reintroduce advertising spend for Irwin.

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McGowan questioned restructuring costs, banker fees, and pro forma financials. Judd clarified, "No, we don't anticipate any restructuring costs, so to speak, but there will be a number of initiatives...legal expenses...audit work...valuation work." He outlined plans to file abbreviated financials for Irwin, focused only on acquired assets.

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McGowan asked about the impact of tariffs and Dr. Tobias challenges. Judd said, "For the skin care, it's the economics and the tariffs. And for Dr. Tobias, it's the sessions, the page views that we're experiencing on Amazon."

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Samir Patel, Askeladden Capital: Probed on revenue synergies, brand priorities, and M&A strategy. Judd emphasized online expansion for Irwin and leveraging Irwin's sales force for MusclePharm. He said, "Dr. Tobias...is a cash cow, generates a lot of cash for us. So it is a priority for us, and we'll continue working on it."

SENTIMENT ANALYSIS

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Analysts voiced cautious optimism, frequently probing about organic growth challenges, margin impacts, and integration of Irwin Naturals. Their tone was curious, occasionally skeptical, with a focus on execution risk and brand-level struggles.

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Management maintained a confident outlook during prepared remarks, stating, "We are hopeful, we're optimistic that we can still deliver some organic revenue growth in 2025." In Q&A, the tone was candid, with Judd acknowledging brand-specific challenges but reiterating strategic optimism and cost discipline. Compared to the previous quarter, the management's tone remained constructive, though more focused on integration complexity and underlying brand volatility.

QUARTER-OVER-QUARTER COMPARISON

* Q2 revenue was $16.1 million vs. Q1's $15.9 million. Net income declined to $1.7 million from $2 million. Adjusted EBITDA dropped to $3.3 million from $3.4 million. Online sales and Legacy FitLife revenue continued to grow, while MRC and MusclePharm faced persistent declines. Management's guidance shifted to highlighting the Irwin Naturals acquisition and its transformative impact, whereas last quarter focused more on incremental organic growth and promotional investment. Analysts remained attentive to brand-level performance and the integration process, mirroring concerns from the prior quarter but with increased attention to acquisition execution and synergy realization.

RISKS AND CONCERNS

* Management acknowledged ongoing challenges with the Dr. Tobias brand, including lower Amazon session counts. Tariffs impacted MRC's skin care brands and contributed to margin declines. The company faces integration risk with the Irwin Naturals acquisition and must manage incremental transaction expenses. Judd stated, "We're focused on solving the biggest opportunities or the biggest pain points."

FINAL TAKEAWAY

FitLife Brands closed the quarter with a stable balance sheet and completed the transformative acquisition of Irwin Naturals, positioning for combined annual revenue in excess of $120 million and adjusted EBITDA between $20 million and $25 million. While strong performance in Legacy FitLife was offset by declines in MRC and MusclePharm, management expressed confidence in realizing online and distribution synergies, addressing brand-specific challenges, and executing cost efficiencies in the coming quarters.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ftlf/earnings/transcripts]

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