Business Context and Reporting Period
Company: FITLIFE BRANDS, INC. (FTLF)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: Provider of nutritional supplements and wellness products under brands including NDS Nutrition, iSatori, MRC, MusclePharm, and Irwin Naturals. The company operates as a single reportable segment.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Revenue | $26,549 | $16,127 | $51,874 | $32,063 |
| Gross Profit | $9,811 | $6,904 | $19,328 | $13,778 |
| Gross Margin | 37.0% | 42.8% | 37.3% | 43.0% |
| Operating Income | $3,355 | $2,518 | $6,416 | $5,476 |
| Net Income | $1,950 | $1,747 | $3,670 | $3,765 |
| Diluted EPS | $0.20 | $0.18 | $0.37 | $0.38 |
| Cash from Operations (YTD) | N/A | $6,119 | $3,523 | |
| Ending Cash Balance | N/A | $1,089 | $1,585 |
Debt & Liquidity (as of June 30, 2026):
- Total Debt: $37,913 (Term Loan: $36,055; Revolving Line: $2,000)
- Available Credit: $8,000 on revolving line
- Working Capital: $9,637
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 65% in Q2 and 62% YTD, primarily driven by the acquisition of Irwin Naturals (closed August 2025). Irwin contributed $14,135 in Q2 revenue.
- Legacy Performance: "Legacy FitLife" revenue declined 23% in Q2 and 22% YTD due to a 19% drop in online sales (MRC brand) and a 31% drop in wholesale sales (GNC partner).
- Margin Compression: Gross margin decreased to 37.0% in Q2 from 42.8% in the prior year. This is attributed to Irwin's historically lower gross margin profile compared to Legacy FitLife.
- Expense Increases: SG&A expenses rose 91% in Q2 and 94% YTD, largely due to the integration of Irwin. Merger and acquisition costs were $0 in 2026 compared to $696 (Q2) and $1,028 (YTD) in 2025.
- Net Income: Q2 net income increased 12% to $1,950. YTD net income decreased slightly by 3% to $3,670, as the benefit of the Irwin acquisition was offset by lower profitability in Legacy brands and higher interest expenses.
Outlook, Risks, and Management Commentary
- Acquisition Integration: Management highlights the Irwin acquisition as a key driver for diversification. Irwin's online revenue run rate reached approximately $11 million by Q2 2026 following an Amazon launch in October 2025.
- Debt Covenants: The company is compliant with all financial covenants under its new Credit Agreement, including a Senior Funded Debt to EBITDA ratio of not more than 2.75 to 1.00 (through Q2 2026) and a Fixed Charge Coverage Ratio of at least 1.25 to 1.00.
- Interest Rate Hedging: The company entered an interest rate swap in September 2025 to hedge 50% of its term loan, converting it to a fixed rate to mitigate interest rate risk.
- Risks: Key risks include reliance on wholesale partners (GNC), concentration of revenue in the U.S. (95%), and potential goodwill impairment if stock price fluctuations reduce the fair value of the reporting unit.
- Guidance: The filing does not provide specific forward-looking financial guidance for the full year 2026 beyond the standard caution regarding forward-looking statements.
Investor Verification Checklist
- Irwin Integration: Verify the sustainability of Irwin's revenue growth and the timeline for achieving projected synergies.
- Legacy Brand Decline: Assess the root causes of the 23% revenue decline in Legacy FitLife brands and the effectiveness of strategies to reverse the trend with key partners like GNC.
- Margin Trajectory: Monitor whether gross margins stabilize or continue to compress as the lower-margin Irwin business constitutes a larger portion of total revenue.
- Debt Service: Confirm the company's ability to meet quarterly principal payments ($1,523 through 2027, then $2,031) and interest obligations under the new Credit Agreement.
- Goodwill Valuation: Review the annual impairment test scheduled for December 2026, particularly given the significant goodwill recorded ($19,333) and the company's reliance on stock price for fair value calculations.