Synergy's Q3 2025 Earnings Call: Contradictions Emerge on RTD Revenue, G&A Expenses, and Beverage Rollout Strategy

Date of Call: November 13, 2025

Financials Results

• Revenue: $8.0M, up 12.4% YOY (vs $7.1M in Q3 2024)
• EPS: $0.01 per diluted share (vs $0.11 per diluted share in Q3 2024)
• Gross Margin: 70.9%, compared to 67.2% in Q3 2024

Guidance:

• Q4 2025: EG of America to launch FOCUS and energy beverages in >1,600 convenience locations.
• Wakefern to carry five beverage SKUs across ~365 stores (retail placement expanding).
• Kroger to launch 3 FOCUSfactor supplement SKUs in ~1,600 stores beginning April 2026.
• Uniprix to introduce supplements across ~300 Quebec pharmacy stores beginning Feb 2026.
• Costco Mexico purchase orders shipping in December (Q4 2025).
• Expect added sales/service headcount and rapid DSD distributor signings in Q4 and into 1H26; $4.4M equity raised to support inventory/rollouts.

Business Commentary:

* Revenue Growth and Product Mix: - Synergy CHC Corp reported net revenue of $8 million for Q3 2025, reflecting an increase of 12.4% year-over-year. - The growth was driven by a favorable shift in product mix, including an 11% price increase in their supplement business and expanding beverage distribution.

• Operational Discipline and Profitability:
• Synergy reported its 11th consecutive quarter of profitability, with income from operations increasing year-over-year by 21.8%.

• This was a result of operational discipline, focused execution, and strategic leadership additions to support expanding operations.

• Beverage Division Expansion:

• The beverage division's revenue reached $159,000 in Q3, with significant distribution wins, including partnerships with EG America and Wakefern Food Group.

• The expansion was supported by a growing national and international retail footprint and strategic leadership hires in the beverage industry.

• Supplement Business Momentum:

• FOCUSfactor was named the #1 pharmacist recommended OTC memory supplement for 2025 and 2026, with retail expansion into Kroger and Uniprix stores.
• The momentum is attributed to the brand's reputation and strategic distribution agreements, further solidifying Synergy's dual supplement and beverage strategy.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted the "11th consecutive quarter of profitability," stated "revenue, gross profit and income from operations increased year-over-year," cited major distribution wins (EG of America >1,600 stores; Wakefern; Kroger; Uniprix), and noted a $4.4M August equity raise to support rollouts, signaling constructive momentum and growth orientation.

Q&A:

• Question from Sean McGowan (ROTH Capital Partners, LLC, Research Division): Can you give us some sense of what contribution there was in the quarter from the beverages?
  Response: Beverage revenue in Q3 was $159,000.

• Question from Sean McGowan (ROTH Capital Partners, LLC, Research Division): Can you give me a little bit more color on the dynamics of the product mix? Specifically, what is the highest margin revenue source and how high is that such that the blended average is so high?
  Response: Supplements are the highest-margin source (~75% gross on supplements prior), and management implemented an ~11% price increase on roughly half the business (Costco), improving blended gross margin.

• Question from Sean McGowan (ROTH Capital Partners, LLC, Research Division): Is the G&A reported in the quarter indicative of an ongoing rate, or will Q4 and ongoing rate be higher given executive additions and other hires?
  Response: Expect higher G&A in Q4 and into early 2026 due to incremental sales and service headcount to support accelerated DSD distribution expansion.

Contradiction Point 1

RTD Revenue and Market Rollout Strategy

It involves differing statements on the timing and progress of RTD revenue generation and market rollout, which are crucial for understanding the company's growth trajectory and financial expectations.

What was the beverage contribution in the quarter? - Sean McGowan (ROTH Capital Partners)

2025Q3: we expect to really see some significant improvement in the fourth quarter on our RTD business. - Jack Ross(CEO)

Did you book any revenue from RTDs in the quarter? - Sean McGowan (ROTH Capital Partners)

2025Q2: More RTD revenue expected in the third and fourth quarters as the company invests in growth and signs retail partners. - Jack Ross(CEO)

Contradiction Point 2

General and Administrative Expenses (G&A)

It involves changes in financial forecasts, specifically regarding G&A expenses, which are critical indicators for investors to assess the company's operating efficiency.

Is the reported G&A indicative of a sustainable rate, or will the fourth quarter and ongoing rate be higher than Q3 due to recent executive additions? - Sean McGowan(ROTH Capital Partners, LLC, Research Division)

2025Q3: It's a good question, Sean. So we've sort of -- we'll call, added a secondary strategy to our beverage rollout. So with the sale of we'll call Poppi to Pepsi and the sale of Alani to Celsius, it really opened up, we'll call a lot of holes in the DSD networks, meaning Poppi and Alani are going back to Pepsi distribution. And we got very fortunate timings everything in life. And the DSD networks, the beer guys have opened up a lot of holes in their distribution network. So two things. Obviously, we expect to have an Allstate's strategy in our DSD network very quickly as we're signing these rapidly, and you'll read about some more next week and the week after and the week after. But more importantly, to support those guys on the DSD side, we will be also adding human capital, salespeople and service people to support those DSD distributors to bring on, we'll call regional retailers. So a little shift there where the opportunity presented itself with holes in the DSD distribution coming available, which should help us accelerate our RTD business a lot quicker than we thought in the convenience store side. - Jack Ross(CEO)

Will G&A expenses increase throughout the year, or are they expected to remain consistent? - Sean McGowan(ROTH Capital Partners)

2025Q1: G&A will have a couple of headcount additions, but as a percentage, it should remain flat throughout the year. - Jack Ross(CEO)

Contradiction Point 3

Beverage Revenue and Rollout Strategy

It highlights changes in the revenue contribution and strategic focus of the beverage division, which could impact investor expectations regarding the company's growth trajectory.

Can you provide the contribution of beverages to the quarter? - Sean McGowan(ROTH Capital Partners, LLC, Research Division)

2025Q3: In the current quarter -- the third quarter was $159,000 of beverage revenue. - Jack Ross(CEO)

What was the RTD beverage sales for the quarter? What are the plans for the remainder of the year's rollout? - Sean McGowan(ROTH Capital Partners)

2025Q1: In the first quarter, Synergy didn't have any planned RTD revenue, but in the second quarter, it expects to do about $2 million. - Jack Ross(CEO)

Contradiction Point 4

Product Mix and Pricing Strategy

It involves changes in the company's pricing strategy and the impact on its product mix, which could affect overall profitability and customer reception.

What is the highest margin revenue source and how significant is its contribution to the blended average? Is this the highest it has been recently? - Sean McGowan(ROTH Capital Partners, LLC, Research Division)

2025Q3: 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. - Jack Ross(CEO)

What are the plans for new stores and customers for the remainder of the year? - Sean McGowan(ROTH Capital Partners)

2025Q1: We ended the first quarter with revenue of $75.6 million, a 29% increase over the prior year quarter. The growth was broad-based across our product categories with supplement sales up 30% and RTD beverages up 18%. - Jack Ross(CEO)

Contradiction Point 5

G&A Expense Expectations

It involves changes in financial forecasts, specifically regarding G&A expenses, which are critical indicators for investors and can impact operational efficiency.

Is the G&A reported in the quarter indicative of a sustained level, or will the fourth quarter and ongoing rate be higher than the third quarter, given recent executive additions? - Sean McGowan (ROTH Capital Partners, LLC, Research Division)

2025Q3: There will be some -- a long way to say, there will be some added human capital in the fourth quarter and first quarter and second quarter as we expand that Allstate DSD distribution. - Jack Ross(CEO)

None - None

2024Q4: We expect our operating expenses for the year to be between $4 million and $4.7 million. - Jaime Fickett(CFO)