NextPlat Corp Common Stock 2026 Q2 Earnings Call

Good morning, and welcome to NextPlat's second quarter 2026 results conference call. Thank you for joining us. On today's call, we will discuss our significantly improved second quarter results and highlight the many positive developments occurring in the business. In addition to discussing results of the quarter, we will also elaborate on key elements of our business strategy and focus areas so you can gain a better understanding of where we are heading and our current expectations regarding our future growth and profitability. As is customary, I will begin today's call by briefly recapping the results of the second quarter, then turn the call over to Birute Norkute, our Vice President of Healthcare Operations, to discuss that segment in more detail, and then turn the call over to Amanda L. Ferrio, our Chief Financial Officer, to review our financial results.

Following that, I will make closing remarks and then conclude the conference call by responding to questions that were submitted by our shareholders. Our second quarter results provide clear evidence that the turnaround initiated over the past year is delivering meaningful results. Strong sequential growth in our e-commerce and contracted healthcare services, particularly 340B, helped drive our consolidated gross margin to a record level of approximately 40%, while our net loss was virtually eliminated. We are extremely encouraged by this momentum and believe the positive trends across our markets position us to accelerate growth, achieve sustainable profitability, and create significant long-term shareholder value. Importantly, our progress extends well beyond cost reductions. We are successfully unlocking the value of our operations, particularly by using our community pharmacies as local hubs for higher margin 340B, long-term care, and institutional healthcare services.

Our planned acquisition near Pensacola will further advance the strategy, strengthening a differentiated business model that sets us apart from traditional national pharmacy chains and creates exciting opportunities for continued expansion. At this point, I'd like to now review our business and provide some additional insights, which I believe will be helpful for investors in measuring our progress. In our healthcare segment, we are pleased to report the following improvements in operations during the second quarter. As a result of our concerted efforts to invest in our higher margin contracted healthcare service businesses, during the second quarter, we continued to see accelerating growth in prescription volumes from our higher margin 340B and government healthcare customers. Contracted pharmacy revenue increased 136% to approximately $2.2 million, driven by medication fulfillment contracts secured in late 2025 and early 2026.

On a sequential basis, contracted pharmacy revenue increased approximately 20% from the first quarter of 2026, supported by ongoing business development activity and the addition of multiple new contracted clients. As has been the trend since last year-over-year total pharmacy prescription revenue was down as anticipated, primarily reflecting lower pay and reimbursement rates and payer mix, something Amanda L. Ferrio will comment on shortly. The strong growth in contracted pharmacy revenue is offsetting these expected headwinds. As we noted in our CEO update announcement and earnings press release, momentum in this segment is building as we set another record, adding six new 340B contracts in Q2, beating the first quarter record of five new contracts.

We expect continued growth throughout the remainder of the year as revenue from the five new covered entities secured in the first quarter and new entities secured in Q2 begin contributing to our results later in the current quarter and more fully in the fourth quarter. In terms of the retail pharmacy business, as I noted earlier, while there continue to be challenges here, we believe our diversified business model built around well-managed community pharmacies, combined with the addition of our contracted services offerings, will allow us to profitably grow the business. As such, growing contracted services revenue, as well as the additional pharmacy revenue from our acquisition, are expected to contribute to meaningful sequential and year-over-year top-line healthcare revenue growth starting in the third quarter and early fourth quarter.

Finally, as we indicated last quarter, we are actively expanding the scale and scope of our business through two key pathways. First, we are preparing for the launch of a new online e-commerce healthcare website, which will feature an array of popular prescription medications such as GLP-1s and over-the-counter products, including our Florida Sunshine brand of premium vitamins and supplements. This new healthcare e-commerce website will allow us to leverage our relationships with current and potential customers as part of our go-to-market plans. The new site is expected to go live this quarter. Second, we are actively working on additional growth initiatives at our Pharmco subsidiary, which we believe will quickly add more scale to its operations, both through potential acquisitions as well as relocating one of our pharmacies to a new location not currently serviced by our existing pharmacies.

We expect to announce developments on these efforts shortly. In our e-commerce segment, here are the most recent highlights. The global demand for satellite-based connectivity products continues to be strong, and during Q2, we generated sales from customers in 115 countries and produced record levels of high-margin recurring airtime contract revenue. Looking at the demand we are seeing, there is particular strength in the government and military sector in Europe, where we are receiving increasing orders for satellite-enabled Internet of Things products offered by partners such as Iridium and Globalstar, as well as Iridium push-to-talk devices under contract with the UK Government department. Over $1.75 million in sales to government sector customers in the first half of 2026 continues to support sequential growth in this segment. At this point, I would now like to turn the call over to Birute Norkute for her update.

Thank you, David. In our healthcare business, second quarter results reflect the operational improvements in business development investments made over the past several quarters, and a deliberate shift in the composition of our volume toward higher-value contracted services. We filled approximately 96,000 prescriptions during the quarter, compared with approximately 91,000 in the prior year period. Within that total, 340B prescriptions grew to approximately 7,500, an increase of more than 33% year-over-year. Retail prescription revenue declined year-over-year. This was anticipated and primarily reflects lower payer reimbursement rates and payer mix. Pressures affected retail pharmacy broadly across the industry. Growth in our contracted and 340B businesses helped offset these headwinds. Turning to profitability. The healthcare gross margins was about approximately 46% in the second quarter, compared with 39% in the first quarter of 2026, and 20% in the second quarter of 2025.

Healthcare gross profit increased to approximately $3.6 million, from approximately $1.8 million in the prior year period, reflecting greater profitability on a lower revenue base. Contracted and 340B services represent approximately 61% of total healthcare gross profit, compared with approximately 52% a year ago. Our expanded sales, account management, and business development teams continued to generate traction, particularly within our 340B vertical. We secured six new contracted covered entities during the second quarter, following five in the first quarter, each a quarterly record. These agreements typically require approximately 90 days to onboard before entities begin referring prescriptions for fulfillment. We expect revenue from the five entities secured in the first quarter to begin contributing late in the current quarter, with the second quarter cohort contributing more fully in the fourth quarter. On our footprint. Subsequent to quarter end, we announced an agreement to acquire a profitable pharmacy operation in Pensacola area of the Northwest Florida, a market we do not currently serve.

The transaction is expected to close by the fourth quarter, subject to customary closing conditions, and will be funded from cash on hand. Beyond extending our geographic reach, this acquisition provides a licensed physical platform through which we can introduce the higher value services we have built, 340B support, contracted medication fulfillment, and provider relationships. That is the model we intend to apply as we evaluate additional markets and adjacent service lines. One note on the margin profile. Our contracted business remains concentrated among a limited number of entities, and mix in any given quarter can move margin in either direction. We are focused on broadening that base as new covered entities onboard. Our operating priorities for the second half are straightforward.

Onboarding the 11 covered entities secured year to date to full referral volume, closing and integrating the Pensacola operation, and continuing to optimize our Florida footprint. We are pleased with the more efficient and scalable healthcare platform we have built, and we remain focused on growing this business deliberately, delivering value to our customers, our patients, and the communities we serve. That concludes my remarks. Back to you, David.

Thank you, Birute Norkute. At this point, I will turn the call over to Amanda L. Ferrio to discuss our financial results for the quarter ended June 30th, 2026.