OFRM

Business Context and Reporting Period

Company: Once Upon A Farm, PBC (OFRM)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Once Upon A Farm is a public benefit corporation and a leader in modern childhood nutrition, specializing in organic, farm-fresh food for babies and kids. The company's portfolio includes cold-pressed Pouches, Refrigerated Oat Bars, Dry Baby Snacks, and Soft-Baked Bars. Products are sold through a multi-channel strategy including brick-and-mortar retail (over 25,000 doors), e-commerce, and a direct-to-consumer (DTC) platform. The company operates as a single reporting segment.

Key Financial Metrics (Year Ended Dec 31, 2025)

Note: Total debt of $60.2 million consisted of $17.2 million in Convertible Notes and $43.0 million under a Revolving Credit Facility as of December 31, 2025. This debt was repaid or converted in connection with the February 2026 IPO.

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 53% year-over-year, driven by a 42% increase in volume growth and a favorable product mix. The company launched 80 new SKUs since 2024, with 45 introduced in 2025.
• Product Mix Shift: Baby Snacks sales surged 226% to $67.4 million, and Kid Snacks sales grew 136% to $20.7 million. Pouch sales (the core category) grew more modestly, with Kid Pouches up 23% and Baby Pouches up 16%.
• Margin Compression: Gross margin decreased by 130 basis points to 42.3%, primarily due to increased trade spending (slotting fees for cooler placement) and changes in sales mix.
• Operating Expenses: Selling, General, and Administrative (SG&A) expenses increased 44% to $107.6 million, driven by higher marketing spend ($9.4 million increase), increased headcount, and professional fees related to the IPO.
• Profitability: While the company remains unprofitable on a GAAP basis, the Net Loss narrowed by 28% to $17.2 million. Adjusted EBITDA turned positive at $2.1 million, compared to a loss of $3.7 million in 2024.

Guidance, Outlook, and Risks

Outlook and Strategy:

• Cooler Expansion: The company deployed over 3,400 coolers as of December 31, 2025, with a target footprint of over 15,000 coolers in North America. Coolers are viewed as a key growth engine.
• Household Penetration: Current household penetration is 5.1%, indicating significant room for growth compared to competitors.
• Innovation: Continued focus on functional products (immunity, brain health) and expanding into older kid demographics.

Recent Capital Events:

• IPO: Completed on February 9, 2026, raising approximately $139.3 million in net proceeds. Proceeds were used to repay all outstanding debt ($43.0 million) and convert Convertible Notes.
• Stock Split: An 18.7-for-1 forward stock split was effected in January 2026.

Key Risks and Contingencies:

• Supply Chain: Reliance on a limited number of contract manufacturers and suppliers; exposure to tariffs, inflation, and climate change affecting organic ingredient availability.
• Customer Concentration: Four customers accounted for approximately 61% of net sales in 2025.
• Product Safety: Risk of recalls or contamination (e.g., a voluntary recall for potential Listeria in June 2024). The company has increased testing frequency to mitigate this.
• Regulatory: Subject to strict FDA, USDA, and state regulations (e.g., California's Assembly Bill 899 regarding toxic elements in baby food).
• Public Benefit Status: As a PBC, the board must balance stockholder interests with public benefit goals, which may not always maximize short-term financial returns.

Investor Verification Checklist

• Debt Repayment Confirmation: Verify that the $43.0 million Revolving Credit Facility and $17.2 million Convertible Notes were fully repaid or converted using IPO proceeds as stated in the "Subsequent Events" section.
• Cooler Economics: Assess the return on investment for the cooler deployment program, specifically the $12,000 annual run-rate sales per cooler and the associated slotting fee costs.
• Customer Concentration: Review the specific identities of the four customers comprising 61% of revenue and the terms of their contracts to assess retention risk.
• Trade Spend Impact: Analyze the sustainability of the increased trade spending (slotting fees) that compressed gross margins and whether it correlates directly with long-term distribution gains.
• Inventory Levels: Monitor inventory growth (increased $25.8 million in 2025) to ensure it aligns with sales velocity and does not lead to obsolescence given the perishable nature of the products.
• Spokesperson Agreement: Review the terms of the agreement with Jennifer Garner, including the $8.0 million cash consideration and the acceleration of payments upon IPO.