BODI

I would now like to pass the conference over to your host, Bruce Williams, Managing Director of ICR. You may proceed, Bruce.

Welcome, everyone, and thank you for joining us for our first quarter earnings call. With me on the call today are Mark Goldston, Executive Chairman of The Beachbody Company, Carl Daikeler, Co-founder and Chief Executive Officer, and Brad Ramberg, Interim Chief Financial Officer. Following the prepared remarks, we will open the call up for questions. Before we get started, I would like to remind you of the company's safe harbor language. Statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested by such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release.

Today's call will include references to non-GAAP financial measures, such as adjusted EBITDA, net cash, and free cash flow. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available within the earnings release, which can be found on our website. Now, I would like to turn the call over to Mark.

Thanks very much, Bruce, and good afternoon, everyone. Welcome to the BODi Q1 2026 earnings call. Last quarter, we reported our Q4 and full year 2025 results, a transformational year where we achieved positive operating income and adjusted net income for the first time since going public. Today, I'm pleased to report the momentum continued in Q1 of 2026. Let me start with the numbers in the Q1 2026 financial highlights. Total revenue for Q1 was $54.3 million, which came in above the high end of our guidance. As a reminder, and as we've consistently noted, Q3 2026 will mark the first quarter where we can make direct year-over-year comparisons that fully reflect our new business model as the legacy MLM business will have completely cycled out of both periods.

More importantly, we delivered our third consecutive quarter of net income at $2.3 million, compared to a net loss of $5.7 million in Q1 of 2025. Operating income was $3.1 million, marking our third consecutive quarter of profitability on this metric. We posted our 10th consecutive quarter of positive adjusted EBITDA at $8 million, up from $3.7 million in the prior year, and gross margin remains strong at 71.8% and within our guidance. As of March 31st, our cash balance was $36.6 million against outstanding debt principal of approximately $25 million, providing financial flexibility to execute our growth strategy. The operational discipline that we've built in over the past two-plus years is now embedded in how we run the business.

We've lowered our EBITDA break even from over $900 million in 2022 to approximately $180 million currently, giving us tremendous operating leverage and the ability to invest strategically in growth initiatives without sacrificing profitability. As we discussed in March, 2026 is the year we're unleashing our innovation pipeline. With our strong balance sheet and substantially improved financial position, we've got the flexibility to fund our retail expansion and the innovation pipeline without compromising the financial discipline that delivered this turnaround. The cornerstone of our growth strategy is a pivot towards a heavier emphasis on nutrition. That'll be executed through an omni-channel strategy spanning direct-to-consumer to retail distribution. This represents entry into a nutrition products category with a market opportunity that is more than 12 times the size of the digital fitness category.

We're bringing iconic brand names like P90X, Insanity, and Shakeology to retail with very high aided brand awareness. Now, we're freed from the MLM commission constraints, we can price our new nutritional products at dramatically lower price points than we have done in the past. In the case of Shakeology, we can utilize a much smaller form factor, the seven serving size, which will give us a $34.95 retail price point versus our previous price point, which was $129 for a 30-serve pack. This represents a significant opportunity for us. As many of you may know, in my career, I've got a long history in the consumer products or CPG industry. From my days at Johnson & Johnson and Bristol-Myers, Clairol, Chesebrough-Pond's, Revlon, and as president of Fabergé, which became Fabergé Elizabeth Arden.

I got background at Reebok, LA Gear, and the huge flower company, FTD. I've been responsible for the creation and/or marketing of billions of dollars worth of some of the most successful consumer products of all time sold through retail distribution, and that's one of our major areas of expansion that I brought to BODi. The process of submitting samples through our broker sales organization, Advantage Solutions, securing buyer commitments, and then waiting for the retailer shelf set planogram to be updated is about a 6-12 month process with inflexible adherence dates.

We're right now in the midst of that process, and over the next 60-90 days, we expect to see which retailers will be adding Shakeology and the P90X line of nutritional supplements. Look, I'm sure you've seen the recent spate of acquisitions in the CPG industry, whether it be Huel, Grüns, Bloom, Alani Nu, Poppi, and a host of other companies that have sold for between $1 billion-$2 billion in the past year with brand names that, while we have great respect for, are not nearly as well known as the P90X and even Shakeology brand names. The potential for creating massive brand equity value for shareholders of BODi within the nutritional supplement and energy drink industry for BODi is potentially the single largest mid-to long-term opportunity that we've got at the company.

Speaking of securing retail distribution, last week we announced that Shakeology will be carried in more than 80 Sprouts Farmers Market stores around the country starting in late May, early June. We just secured a partnership with KeHE Distributors, which is one of the two largest distributors of natural, organic, and fresh products to the grocery industry. This will give us the opportunity to reach the 30,000 grocery, supermarket, and online channels that are covered by the KeHE distribution network. In late-breaking news, we just announced in a press release yesterday that Shakeology will now be carried by The Vitamin Shoppe across its more than 640 stores all over the U.S.A. later this year, with The Vitamin Shoppe taking all five of the Shakeology flavor variants in our new 7-serve, $34.99 retail price packaging.

This exciting news, along with the Sprouts Farmers Market news and the KeHE distribution deal, will mark the first time that Shakeology, which is a $4 billion cumulative sales brand with more than 1 billion cumulative servings, the first time it will be available in retail stores across the USA. On the next quarterly earnings call, we hope to have an update on more exciting retail partners for the Shakeology brand and new retailers signed up to carry the P90X line of supplements and the retail stores who will be carrying the Insanity and P90X energy drinks in the Southern California test market we'll be running later this summer. You know, one of the truly unique and compelling aspects of the new BODi retail distribution initiative as a consumer product company is that we've fundamentally created a virtual consumer products company. What do I mean by that?

Well, we've outsourced virtually every aspect of our supply chain and distribution infrastructure. Manufacturing is outsourced to best-in-class contract manufacturers. Sales and retail distribution are managed through our outside partner, Advantage Solutions. Fulfillment and logistics of all of the retail orders are handled by a third-party logistics provider or a 3PL. We're evaluating the use of purchase order financing and accounts receivable factoring to optimize our working capital as relates to the retail project. What we keep in-house are the core competencies that drive our competitive advantage. Those are marketing, brand management, product innovation, and R&D. This asset-light model gives us exceptional financial flexibility, minimal capital requirements, and importantly, the ability to scale rapidly without proportional increases in fixed costs since this structure moves the majority of those costs to a variable-based cost based on usage and demand.

In conclusion, our financial turnaround has created massive operating leverage, giving us the ability to invest strategically in high-return initiatives while maintaining profitability. We're excited about the opportunities ahead, particularly as we move into the second half of 2026 and then beyond. This year marks the opening of our nutritional innovation pipeline. We are actively in the process of developing new products, securing retail placement, and building market acceptance. While we expect to see initial traction in the second half of 2026, the substantial yield from these initiatives will materialize in 2027 and beyond as our retail presence expands and our multi-channel strategy fully takes hold. We've built a resilient financial foundation that positions us to capitalize on significant growth opportunities in both nutrition and digital fitness, and we're taking a disciplined, methodical approach to ensure we execute this transition successfully.

I'll now turn it over to Carl to discuss our operational progress and product innovation strategy. Carl?

Thanks, Mark. Our Q1 results demonstrate the operational momentum we've been building throughout 2025 and into early 2026. The financial discipline we've established has created an extremely efficient platform with leverage to execute against a compelling innovation pipeline across multiple sales channels. P90X Generation Next launched in early February to a packed house of media and influencers in New York City, generating millions of impressions in both earned and paid media. Early response from our subscriber base has been very enthusiastic, and we're now gathering the success stories from the first wave of participants.

That's especially important as we launch our branded nutritional line extensions in the P90X supplements, which will be sold direct to consumer on Amazon, TikTok Shop, and as Mark mentioned, at retail, including an entire ready-to-drink line of P90X Energy drinks. This is a really big deal with very special formulations which live up to the reputation of the best-selling extreme home fitness program of all time. We've launched a P90X Pre-Workout, P90X Hydration, P90X Creatine, P90X 100% Whey Protein, and P90X Energy that can be used to fuel longer training sessions, or in my case, for a midday boost of energy. Each SKU in the line has something called a P90X Factor, a proprietary aspect of the formulation which makes it fast-acting, potent, and effective, so you get the performance benefits as promised.

The P90X supplement line launched with our long overdue transition over to the Shopify e-commerce platform, which will make it easier for us to offer special bundle configurations, subscribe and save discounts, and improve AOV using Shopify's add to cart recommendation engine. We expect that to propel momentum of the fitness program and the P90X supplement line in every channel over the next 12 months. Meanwhile, the Ten Minute BODi initiative continues to gain traction. The category of micro-dose fitness, which we launched under the Ten Minute BODi brand just before Christmas, continues to be a very popular program on the platform.

Since our last call, we've expanded the catalog with three new targeted programs, Ten Minute Speed Train by Joel Freeman, Ten Minute Active Aging led by Debbie Siebers for those 60 and older. You'll recognize Debbie from her recent appearance on ABC's The Golden Bachelor. She is also one of the first super trainers to help us launch the company. We also just launched the Ten Minute GLP-1 Fitness Formula, specifically designed to help people on GLP-1 medications to build and preserve muscle mass. The platform now features over 400 science-backed 10-minute workouts, and this high-volume, low-price subscription at $10 a month is successfully opening up our addressable market to the over 185 million Americans who are overweight or obese and may be intimidated by longer workout programs.

Okay, looking ahead to the summer, we have a new super trainer joining us, Chase Collett, with the brand-new Thirty-Day Booty Boost program launching in June. This has been one of the most requested additions to the catalog by subscribers and prospects. We'll integrate the P90X supplement line to help people get the maximum gains from the program where it counts, using the pre-workout, P90X Creatine, and P90X protein. That's exactly how nutrition has been fundamental to our success since we founded the company, helping people get the best results from their effort. Shakeology, the world's first superfood protein shake, which we launched in 2009, is probably our most significant nutrition innovation in the company's history. To put that in perspective, during our peak revenue years, fitness programs accounted for roughly one-third of total revenue, while nutrition drove about two-thirds, largely driven by Shakeology.

Now that we're freed from the margin and distribution constraints of the network marketing model, we can offer all our supplements, whether it's Shakeology, P90X, or other brands, all at more accessible price points with healthy margins, dramatically expanding our opportunities to grow and scale in multiple sales channels like Amazon, TikTok Shops, and retail, as Mark outlined. What makes this nutrition expansion especially compelling is how it transforms our customer engagement and results model. Our data continues to show that we scale customer acquisition at a lower cost when offering nutrition first and bundling fitness with it, as opposed to offering digital fitness first. I believe that's because of the significant size of the nutrition market and the ease of consumption relative to the decision to start a new fitness program.

By leading with nutrition in this substantially larger category, we can attract customers through a wider top of the funnel, then introduce them to our digital fitness platform through free trial offers. Every customer who enters the ecosystem with a nutrition purchase is offered a free trial to join the fitness platform, a major value add and a competitive advantage in the massive supplement market. This nutrition-first approach with fitness second enables us to deliver the total solution, the unique combination of comprehensive lifestyle change that has consistently driven our best customer results over nearly three decades.

We think this construct could be especially potent for the digital app experience now that we've just launched the ability to add up to four additional profiles to one membership, meaning anyone who's in a free trial of the digital app can invite up to four members of their household to set up their own profile under the same membership at no extra cost. This could help overall conversion as more household use should translate into retention. What follows, of course, is more people using the BODi app in the household means more people who would likely consume our P90X supplements, our pre-workouts, Shakeology, and so on, in order to maximize their results. All of these improvements work together to optimize our marketing model that will drive traffic across multiple channels and improve the customer experience at every touchpoint.

All of this should position us well to build on the momentum of our turnaround. Now I'll turn it over to Brad Ramberg, our CFO, to walk you through the Q1 financial details and our guidance for Q2. Brad?

Thank you, Carl, and thank you everyone for joining the call today. I will review our Q1 results and provide our outlook for the second quarter of 2026. We continue to make significant progress on our transformation and on driving operating efficiencies. For the quarter, we exceeded the high end of our guidance for revenue, net income, and adjusted EBITDA. We generated our third consecutive quarter of net income and operating income and our tenth consecutive quarter of positive adjusted EBITDA. For the quarter, total revenues of $54.3 million declined 2.3% sequentially and declined 25% year-over-year, better than expectations as we continue to execute on our strategic transformation. Revenues continue to be impacted in the near term by a shift from a multi-level marketing platform to our current omni-channel model.

Moving to digital and nutrition and other revenues, it's important to reiterate that the year-over-year decline continues to be heavily influenced by remnant revenue from the former MLM legacy business, which was shut down December 31, 2024. There's a component of MLM legacy digital and nutrition revenue that will remain through the first half of this year. We move to Q3 of 2026, we will be able to show a direct year-over-year comparison because the remaining legacy revenue associated with the former MLM will have burned off, and those who remain from that cohort will have become part of the BODi new business model revenue base. To be clear, this is not to suggest that we're projecting year-over-year revenue growth in Q3 of 2026. We are not providing guidance for Q3 of 2026, that will occur on our next earnings release.

Now note, the direct year-over-year comparisons I'm about to disclose for digital and nutrition revenue are still skewed by the fact that the 2026 numbers reflect a new business model versus the 2025 numbers, which still had a major component of revenue that was part of the legacy MLM. Digital revenue decreased 2.1% sequentially to $33.6 million and 21.8% year-over-year. Digital revenues reflect continued pressure on our digital subscriptions, which decreased 6.9% quarter-over-quarter to approximately 810,000 and declined 20.6% compared to the same period a year ago. Nutrition and other revenue decreased 2.5% from the prior quarter to $20.7 million and decreased 27.7% year-over-year.

Nutrition subscriptions decreased 25% sequentially to approximately 60,000 and fell 18.5% year-over-year. As our business evolves into an omni-channel model generating higher one-time sales and retail sales, the subscription metric will be a less relevant KPI. Digital gross margin was 87.4%, increasing 10 basis points sequentially and up 190 basis points from prior year. Our digital gross margin was in line with our target. The continued strength in year-over-year gross margin was primarily due to a decrease in digital content amortization and depreciation due to more disciplined production and fixed asset spending. Nutrition and other gross margin was 46.7%, decreasing 700 basis points sequentially and down 640 basis points versus last year. Nutrition and other gross margin was in line with our target.

As a reminder, Q4 2025 nutrition gross margin of 53.7% included certain one-time benefits. Exclusive of those benefits, nutrition and other gross margins declined 390 basis points sequentially. The decrease in nutrition and other gross margin was primarily due to inventory adjustments in the current quarter. Consolidated Q1 gross margins were 71.8%, reflecting a decrease of 270 basis points sequentially, but an increase of 60 basis points compared with the prior year. We're pleased to report that consolidated gross margin remained within our target gross margin range. Operating expenses for the quarter increased 8.2% sequentially and declined 35% year-over-year to $35.9 million. Selling and marketing expense as a percent of revenue increased 230 basis points over the prior quarter.

The increase from the prior quarter was due to planned higher advertising spend and new product launch expense. Selling and marketing expense declined 820 basis points year-over-year to 34.6%. The significant improvement over prior year stems from eliminating MLM seller compensation following our December 31, 2024 exit from the multi-level marketing channel. Enterprise technology and development expense was 17.3% of revenue, up 160 basis points sequentially, and declined 10 basis points year-over-year. As a reminder, Q4 2025's enterprise technology and development expense of 15.7% included certain one-time benefits. Excluding these benefits, enterprise technology and development expense increased 40 basis points sequentially. G&A was 14.2% of revenue, increasing 240 basis points sequentially.

As a reminder, Q4 2025's G&A expense of 11.8% included certain one-time benefits. Excluding these benefits, G&A expense increased 70 basis points sequentially. G&A declined 190 basis points from the prior year due to a decrease in personnel-related expenses and professional fees. Operating income for the quarter was $3.1 million, compared to a loss of $3.7 million in the prior year, marking our third consecutive quarter of operating income. Net income for the quarter was $2.3 million, compared to a net loss of $5.7 million in the prior year, marking our third consecutive quarter of net income. Adjusted net income was $2.5 million for the quarter versus a $5.1 million adjusted net loss in the prior year.

Adjusted EBITDA was $8.0 million compared to $12.9 million sequentially and $3.7 million in the prior year, marking our 10th consecutive quarter of positive adjusted EBITDA. Now turning to the balance sheet. Our cash balance was $36.6 million compared to $39.0 million in the prior quarter and $18.1 million last year. Our net cash position was $13.0 million. Cash used in operations for the quarter was $1.0 million compared to cash generated from operations of $2.3 million in the prior year. Free cash flow was negative $1.7 million compared to positive $1.6 million in the prior year. Now turning to our second quarter guidance.

While we're pleased with the execution of our transformation, I wanna reiterate that this guidance should not be compared to Q2 of 2025, because Q2 of 2025 still had revenue recognized from the legacy MLM model. We continue to drive operating leverage, and we're excited about the opportunities ahead. We have a stronger balance sheet, a sustainable and viable long-term business model that allows us to grow without the structural impediment of the previous MLM model. However, we're still in the early stages of the new distribution model, and it will take time to develop traction in these new lines of business. As a reminder, the tail of our legacy business is winding down, and we expect that the first time we'll be able to do a year-over-year comparison of our new business model will be comparing Q3 of 2026 to Q3 of 2025.

We expect second quarter revenues to be in the range of $46 million-$51 million, net income to be in the range of -$3 million to break even, and adjusted EBITDA to be in the range of $3 million-$6 million. For the quarter, we anticipate revenues to approximate 60% digital and 40% nutrition and other. However, in line with the strategies we articulated on this call, we currently expect a shift by the end of 2026 to a larger percentage of our business being in nutrition and the attendant margins that come along with it. For the quarter, our digital gross margin target is expected to be in the range of 86%-88%.

Our nutrition and other gross margin target is forecasted to be in the 43%-47% range, which is in line with our volume expectations and certain promotional efforts planned. Our total gross margin target is expected to be in the 69%-72% range. In closing, we continue to make considerable progress against our business transformation. We significantly lowered our break-even point and strengthened our financial position, putting us on a solid financial foundation to execute against our growth initiatives that will drive long-term shareholder value. I look forward to updating you on our progress on our next earnings call.

We will now begin the question and answer session. Your first question comes from the line of Susan Anderson with Canaccord Genuity. Your line is open. Please go ahead.

Hi. Good evening. Thanks for taking my questions. Nice job on the quarter. I was wondering maybe if you could give some more color on the new P90X launch and then the Ten Minute BODi programs. It sounds like they're doing well, particularly the Ten Minute BODi. I guess, is there any way to quantify what %, utilizing the program are new subscribers versus existing subscribers?

Thanks, Susan. You can hear me okay?

Yeah.

Okay, great. Just wanted to make sure. We don't break them out like that, but I will say that as we've pivoted to the nutrition where we're advertising nutrition, I will say that the P90X supplements are attracting both new traffic, but also doing a really good job of activating new customers from the large database that we've got. It's a reactivation play.

Pleasantly surprised by how it's working within the database. Ten Minute BODi is where we're seeing more of a new subscriber acquisition volume happen because of that high volume, low price opportunity where we're advertising 10-day free trial and a $10 per month subscription. Seeing a nice proportion of those people coming in for the 10-day free trial at $10 level up to the $19 a month full subscription. That's the way we're looking at those two particular aspects of the content. Like I said, P90X is in its very early days. We're just collecting all the success stories from the first wave, and that's what's gonna propel the next 12-18 months of traffic and excitement about that particular program.

We layer on top of it with the new programs like the Thirty-Day Booty Boost that'll come out this summer. Again, all of it is secondary to the strength of customer acquisition that we're seeing from advertising nutrition first, digital second.

Okay, great. That sounds really positive. Then maybe if you could give us an update on the Shopify transition. I think that happened late March. Any changes there? Any color on how that transition went?

Well, that is probably my favorite thing to talk about. I will try not to monopolize this, we are definitely seeing across the board that was a very good decision. What we're even more encouraged by is how we're improving conversion of the current rate of traffic based on the ease of use of both the Shopify platform and, now adding the Shop Pay option so that people who already have their information, with one click of the purple button, have an easier time to check out. I think maybe what's most encouraging to me, there's two things. One, we're seeing that from a competitive standpoint, our website is actually converting better than some competitors that we're appropriately compared to.

There's also some low fruit on the tree for us to make improvements in our conversion and our landing page, and landing pages and site navigation so we can even make more efficient use of the traffic that we're already generating. Again, we've got two levers here to work with. One is nutrition is generating traffic at a much more efficient cost of acquisition, and the ease of use of the Shopify platform is converting more of those customers, and we see low fruit on the tree to improve on that traffic already. Overall, it's been a very good transition for us, despite being at the end of the quarter and a lot of stuff going on. Very pleased with the effort that the team put into that.

Okay. Great. Maybe if I could just add one more. I guess, just trying to get a sense of what the top line will look like once, you know, we cycle the MLM departure. I guess, you know, when you look at the top line right now, it seems like kind of the quarters are about $50 million run rate. I guess, do you have any insight into, you know, if you know, think there's still a lot of legacy MLM subscribers left to cancel or, you know, kind of what that run rate will look like once we're done with that? Thanks.

Most of that's gonna be clean by Q3. That's why we say Q3, Susan, this is Mark, is gonna be the first sort of a year-on-year clean quarter read. We're just getting to the remnants of it right now and, you know, through the end of Q2, and then when we get to Q3, that should be a rather de minimis amount, and it'll be a pure read of Q3 2026 versus Q3 2025.

Okay. Great. Thanks so much. Good luck the rest of the year again.

Sure. Thanks, Susan.

Your next question comes from the line of Eric Des Lauriers with Craig-Hallum Capital Group.

Thank you for taking my questions. Congrats on the continued impressive progress here.

Thank you.

My first question is a bit of a follow-on to the last question. Sequential revenue declines here, they've improved now to less than 3%. Average revenue per digital subscriber increased sequentially for the first time in nearly two years. Average revenue per nutrition subscriber also up sequentially. Can you talk about just kind of trying to parse that out, the impact of any recent price increases on that sort of average revenue per nutrition subscriber and I guess digital as well? Just whether we should take that, you know, these sequential increases as signs of the MLM headwinds easing, or if there's other sort of pricing or customer dynamics to sort of be aware of here.

Just wondering how you expect that average revenue per subscriber number to progress and if that's a sign of MLM headwinds easing.

Hey, Eric. Those are great questions. Essentially, it's not really because of the headwinds easing. We really didn't have pricing increases to speak of. As we talked about in the last call, you know, we started a pivot, and we're pushing nutrition more than we did before. We were using the digital fitness sort of as the lead before, and then we would convert people to nutrition. Realizing that digital fitness is a $13 billion category and nutrition is a $164 billion, it was kind of like the tail is wagging the dog. Since we you know, changed our pivot.

One, our CACs are lower, even though we don't publicly disclose the actual CAC, our CACs are lower, and the conversion rates are great, and there's a very high percentage of people who take nutritional supplements in general, as you know, who exercise. We're seeing organic improvement in that nutrition business, and part of it is up until about nine months ago, 10 months ago, we never even advertised it. I mean, by and large, you know, it was only done by the MLM, where they sold it direct or they sold it as an add-on. So we're making the public, which previously had not seen these products, aware of them, and the results have been quite effective. That's a big reason why we made the pivot and why we feel so emboldened by the results that we're seeing.

Not saying it's going to be on a high glide path because we don't know that, we're not projecting that, but we do see as our future goes that because this company in its past had 66% of its revenue in nutrition, that the opportunity for us to significantly grow that part of our business is real, and we're going after it.

Yeah, certainly a very attractive, you know, growth opportunity and outlook here. I guess just one more on that. Should I understand the increase in sort of average revenue per subscriber as lowered customer acquisition costs as you were kind of just touching on or, you know, lower contra revenue items, or is there some other sort of just organic growth aspect that's helping drive that average revenue per subscriber number up?

I think Hi, Eric. This is Brad. In terms of nutrition in particular, we are having more one-time sales, especially now that we're advertising it. As I mentioned in my sort of prepared remarks, I think the nutrition sub number isn't necessarily the best metric to use going forward. Over the time, we'll come up with a better sense of guidance. There is certainly more one-time sales in addition to the nutrition orders that are sold via subscription.

Yeah. Remember, Eric-

Okay.

A lot of people don't just buy a single product. If they buy a bundle or buy a stack, as the case may be, that obviously helps to build AOV.

Yeah, absolutely. That's helpful. Thank you. I was wondering if you could expand on the impact of KeHE Distributors.

Yeah.

I mean, does this simply sort of get you a seat at the table with grocers, or is KeHE itself doing any marketing on behalf of Beachbody? If you could just expand on what you expect with that partnership?

Yeah.

That'd be great.

Great question. As you know, KeHE is a huge company, one of the two dominant distributors in the food industry. They've got, as I understand, over 30,000 individual grocers who are in their network. The way it works is, for example, we're selling Sprouts. Sprouts is part of the KeHE network, when you get Sprouts, you get added to KeHE, now you're in their system. KeHE has its own sales organization, which goes out to these 30,000 retailers as well. Separate from our broker organization that we've hired at Advantage, they have their own internal organization. They can now make their client companies, the 30,000 grocers, aware of the fact that they now carry our product and it is available for purchase.

We intend to work closely with KeHE to help indoctrinate their sales organization so that they can do effective communications out to their grocer member network so that they can potentially buy our Shakeology product, and this is for Shakeology.

That's all, very encouraging. Thank you.

Yes. Thank you, Eric.

Your next question comes from the line of George Kelly with ROTH Capital Partners. Your line is open. Please go ahead.

Hey, everyone. Thanks for taking my questions.

Sure. Hey, George.

First one, Hey Mark. First one is on the Southern California test. Can you just update us on the status of that test and what you've learned? I'm not sure what the distribution looks like or just-

Yeah.

Any kind of update on that test would be great.

We literally just got off a call 1 hour ago on this. We have hired the best beverage distributors, beverage company to help with distribution in the country, which is L.A. Libations out of Los Angeles. They are just top drawer. In fact, they just ran their beverage forum, two weeks ago. It was massively attended. They are representing us in the Southern California market to go out to distribution, remembering that we are, George, off the planogram cycle right now. Most of these retailers are, you know, already have their store shelves set. They're gonna be going out with what they would call an interruptive sale, which is you're going in off cycle to show two very compelling products.

Insanity, which is gonna be called Insanity Liquid Shock, that's what we're calling it, and then we've got our P90X product. That product is in the process of going through final stages for production. We will have production quantities available in July, and then they're ready to ship. We anticipate probably being on shelf in Southern California stores that the L.A. Libations sales organization will be selling over the next, call it, six to eight weeks. We'll probably be on shelf at some point in August, which is exactly when we thought we would be. We are tracking, it's on schedule, and the plan would be put it in the test market, read the results, and then a lot of retailers have their meetings in October and November for their Spring 2027 planogram resets.

The planogram resets for most retailers is in March of 2027. And the presentations to get into those planograms, this is for national, will be in October and November. The goal is get on shelf end of the summer, get some great reads, hopefully, of P90X and Insanity energy drinks in the Southern California market, and then use that as a proxy to go into those October and November national meetings to secure distribution that will then occur in the spring of 2027.

Okay. Okay. That's great. Then a follow-up to that. As you build both the business you were just talking about, the P90X and Insanity stuff, as well as the Shakeology at retail, how should we think about gross margin? Is it gonna be a material kind of impact as those revenue lines grow? Just any kind of context there would be helpful.

I think the best way to think about it, Brad, you know, feel free to jump in here, is those margins in nutrition as wholesale becomes a bigger and bigger part of the business, which knock wood it will probably be in and around the mid-40s for nutrition. That's the best way to think about that. On a weighted average basis, you know, versus where we were, which is 48%-50%, it won't be a huge difference. The way we look at it, George, is while that will be the margin component, as we move into 2027, we're looking at the material gross profit dollars themselves because this should become a volume business at some point where we're just looking at actual gross profit.

We know going in that a wholesale business in nutrition will be in the 40-plus range of margin. The question will become what percentage of our overall company is that, and then where do your weighted average gross margins go? At this point, we really can't project that yet because we're in such early days.

Yep, understood. Last question for you. I know it's less a focus, but the digital fitness side of your business, how the sort of content spend and new programming and, like, how much are you scaling all of that back? Marketing around your digital fitness business, like, how quickly should we think about the shift in focus, like, starting to sort of play through the numbers?

Yeah.

understating how much it's impacting?

Yeah, I wouldn't look at it that way, George. What we're really seeing, like, it's still a very critical and, frankly, a competitive advantage that we have with the size of the library, the scope of the over 160 programs in the library, and frankly, we have kept the capital allocation to new content the same for about the last two and a half, three years. That's consistent. What we've found, though, is we are acquiring customers into both the digital subscription and the nutritional products at a more efficient rate by leading with the nutritional. If you think about it just from a consumer standpoint, they're thinking about a healthy lifestyle change. They see Shakeology, or they see the new P90X supplements being advertised D2C, and they go, "Oh, you know what?

I'd like to make a lifestyle change." They come in and then see the digital subscription, offerings available to them, and we are still converting people into digital. Plus, when they buy, for instance, a Shakeology, let's say they buy a bag of Shakeology, and, that's about $120. They might get a little discount on that if they're a first-time customer. We will offer them a free 30-day trial into the digital subscription that rolls over into, whether either a monthly or an annual subscription. It is still what we call the total solution, which is what has driven the company, to growth since we started it. Digital fitness is still fundamental.

We're still investing in it, and it's still, I think, an important competitive advantage that we've got in all these sales channels where we're leading with nutrition.

George, let.

the value that we get to add to the purchase.

Let me add something on to what Carl just said, and think about it like this, because this is really a very clever move that we're making here. With the digital fitness market being $13 billion, just imagine you're fishing in a lake. The nutritional category, at $164 billion, is literally an ocean. What we're finding is that it's a much more efficient attachment mechanism to go into that larger nutritional market because 60%+ of the people who take nutritional supplements exercise. We're now taking a focus saying, "We're gonna get you out there with the advertising on nutrition." When you come to the BODi website and you see that we are the premier player in the world in digital fitness, we're getting a lot of upselling occurring. People not only buying the supplements, they're buying the digital fitness.

What does that do? That brings your CAC down. You're getting much more efficient CAC because you're promoting nutrition, and you're getting the add-on of digital fitness, or they're going right to digital fitness, and they just were attracted by the advertising in nutrition. What we're finding is that with the same level of dollar spend, we're actually getting a preferential customer acquisition cost, which gives us a better yield and lifetime value. Does that make sense?

It does. Yeah, it does. Thank you.

Sure.

Your next question comes from the line of Alex Hantman with Sidoti & Company. Your line is open. Please go ahead.

Good evening, and thanks for taking our questions.

Hey, Alex.

My first question, just following up on the retail launch. I know you spoke about The Vitamin Shoppe, coming into play later this year. Could you talk a little bit about, you know, how many stores might be used at launch, and if there's any metrics that you might be looking to hit for the rollout to be expanded?

Luckily, they were very impressed with the product line, so it's going chain wide to the over 600 The Vitamin Shoppe stores out of the gate. It's not a limited roll, see how it does, and then roll it out. We're going chain wide, nationwide with The Vitamin Shoppe at present. It should be in stores, you know, probably sometime maybe late August into early September. That's the plan. Yeah, they're a great partner, and they're excited about it, and so are we.

That's great. Congrats, Mark.

Yeah. Thank you.

Is Sprouts also starting, you know, at the full rollout?

No, Sprouts, I think we're gonna be at 90 stores. That was, you know, basically laid out by them and us as the best places for us to be out of the gate. Assuming we have great success there, I assume there will be more stores obviously added after that. We have a great component of stores that we're going in and enough to really do a meaningful business. They're, again, a fantastic partner to be in. Incredibly well-respected, not only by the consumer, but by their brethren in the grocery business.

That's great momentum. Thank you.

Yeah.

Just a, yeah, a couple more from us. You know, I know you've spoken about nutrition being, you know, a much more efficient catchment, you know, and providing a lot of cross-selling opportunities. I know you mentioned, you know, that the retail products will come with complimentary digital access. Do you have, you know, conversion rate assumptions? Basically, how are you thinking about the cross-selling success of that channel after launch, measuring that?

Well, we don't really know because we're still waiting on You know, we have, like, 30, 40 sets of samples that are sitting in retail buyers' offices waiting to get responses from them as to who will be adding the product line. Hard to make any kind of an estimate when we're not really sure where that distribution's going. I said in my prepared remarks, hopefully on the next call we'll have an update as to who's carrying these products, where, and what kind of doors we'll have. There's really no way to know that out of the gate. I mean, we can make an educated guess, but you don't really know that. We're gonna have to see how it plays out, but it's a tremendously effective tool.

It just depends on how many doors promote our product, whether we get end cap displays or just in line, and whether there will be in-store signage that touts the fact that when you buy the product, you're getting a month of free access to BODi. But that will all start to materialize as we get the distribution nailed down.

Understood. That's great. Thank you.

Sure. Thank you.

Your next question comes from the line of Michael Kupinski with Noble Capital Markets. Your line is open. Please go ahead.

Hi, Michael.

Michael, you might be muted on your end.

Yeah, Michael, we're not hearing you.

Michael, I'll have you try one more time. Your line is open. Please go ahead.

Well, looks like the string to the Dixie cup may have been disconnected. Okay.

Well, that concludes our Q&A session for today. I'll now turn the call back to Mark Goldston for closing remarks.

Thanks very much, Elizabeth. Really appreciate everybody attending today. We're really proud of the quarter that we just put up, and we're really excited about what the future holds for the company as we've articulated. As always, if you have any questions, please feel free to reach out to the company either through ICR or directly to Brad Ramberg, our CFO. Thanks, everyone. Have a great evening.

That concludes today's call. Thank you for your participation, and enjoy the rest of your day. You may now disconnect.

Good afternoon. Thank you for attending today's Beachbody Company, Inc Fourth Quarter 2025 Earnings Conference Call. My name is Tamia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to your host, Bruce Williams, Managing Director of ICR. You may proceed, Bruce.

Welcome, everyone, and thank you for joining us for our fourth quarter earnings call. With me on the call today are Mark Goldston, Executive Chairman of Beachbody Company, Carl Daikeler, Co-Founder and Chief Executive Officer, and Brad Ramberg, Interim Chief Financial Officer. Following the prepared remarks, we'll open the call up for questions. Before we get started, I would like to remind you of the company's safe harbor language. Statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results may differ materially from those suggested by such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC, which includes today's press release.

Today's call will include references to non-GAAP financial measures such as adjusted EBITDA, net cash, and free cash flow. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is available within the earnings release, which can be found on our website. Now, I would like to turn the call over to Mark.

Thanks very much, Bruce, and good afternoon, everyone, and welcome to the BODi Q4 2025 Earnings Call. 2025 was an important transitional year for BODi as we started on January 1st, 2025 as a brand new company which had extinguished our former multi-level marketing business model in favor of a five-pronged omni-channel model featuring direct-to-consumer, Amazon and marketplaces, retail distribution for the first time ever later this year, and a single-level affiliate program, and a totally revamped customer win-back program for our former customers, which count more than 8 million, and that covers former digital fitness and nutritional customers. As a result of the dramatic shift in our business model, year-over-year comparisons are not really relevant from a revenue perspective because we're no longer utilizing the tens of thousands of former MLM sellers in the 2025 and beyond business model.

In fact, we continually expressed over the last 12 months, as you know, that the first time investors can actually make a direct year-over-year quarterly revenue comparison with clean results reflecting the new business model in both years will be the Q3 2026 earnings release. As a result of our outstanding financial performance in 2025, in early January 2026, we were able to secure some substantial improvements to certain financial covenants with our lenders, Tiger Finance and SG Credit Partners. In the new agreement, as long as BODi maintains a cash balance of more than $4.6 million above the outstanding debt level, there will be no testing of the key covenants by our lenders. These covenants will only be tested if our cash balance dips below the $4.6 million cushion above the outstanding debt level.

I'm very pleased to report that as of December 31st, 2025, our cash balance was $39 million against an outstanding debt level of only $25 million, giving us a $14 million cash cushion versus the $4.6 million cash cushion we are required to maintain in order to not have the covenants tested. As we indicated on the Q3 2025 earnings call, extremely pleased with the dramatic turnaround of our financial performance in the two and a half years since I joined as Executive Chairman to conduct a major turnaround of Beachbody. Our financial turnaround, which we previously defined as achieving quarterly and then full-year positive operating income and net income, is one year ahead of the original articulated goal of achieving the milestone by December 31st, 2026.

In fact, we achieved positive net income in Q3 2025, and today we're reporting that we achieved positive net income in Q4 of 2025, and we've achieved positive adjusted net income for the full year 2025. We also achieved positive operating income in both Q4 and for the full year of 2025. This marks the first time since 2021 that we had both positive operating income and adjusted net income for the full year. To put this impressive milestone achievement in perspective, we had the second consecutive quarter of operating income in Q4 2025 at $8.2 million for the quarter, which was a $41.1 million improvement in operating income versus the same quarter, which was Q4 of 2024, when we recorded an operating loss of $32.9 million.

From a net income perspective, we recorded positive net income for the second quarter in a row in Q4 of 2025 of $5.2 million, which was $39.8 million better than the $34.6 million net loss in Q4 of 2024. In addition, we've continued to demonstrate our financial discipline since I joined 10 quarters ago in June of 2023 by posting our ninth consecutive quarter of positive adjusted EBITDA in Q4 2025 at $12.9 million, which was a 48% increase over the $8.7 million in Q4 of 2024.

You know, as we've stated on previous earnings calls, because of the accelerated pace of the BODi financial turnaround and the fact that we're a full year ahead of schedule, we've designated 2026 as the year when we unleash the first elements of our fertile innovation pipeline. The innovations kicked off in December 2025 with the launch of a revolutionary concept designed to address the 185 million American adults who are overweight and/or have issues with blood pressure, cholesterol, blood sugar, sleep apnea, and frankly, don't have the time, the knowledge, or even the inclination to participate in a full-fledged 45- to 90-minute exercise program.

This innovative program, called the 10 Minute BODi, is a 400 video program covering a whole range of exercises and body part movements, and it's fun, easy, effective, and can all be accomplished in just 10 minutes a day and for just $10 a month. Next, we launched the P90X Generation Next program last month, marking the first time in 15 years where we've introduced a new version of the legendary P90X program, the number one selling extreme fitness program of all time with many millions of users. Carl's gonna speak more about the digital fitness innovations for 2026 in a minute. One of the major themes of our innovation pipeline and revised focus within our business is the development of the nutritional side of the business. The nutritional supplement category globally is $164 billion.

That's more than 12 times the size of the global digital fitness category and was always a critical element of Beachbody Company revenue base, often exceeding the digital fitness revenue by two to one in the most successful years of the company. We're gonna enter the retail market of grocery, drugstores, mass merchants, and club stores for the first time ever in Q2 of this year with our new P90X line of nutritional supplements, a new seven-serve, $34.99 form factor of our Shakeology brand, which by the way, has sold $3.4 billion cumulatively and had over 1 billion servings as a 30-serve, $129 product. This product, Shakeology, has never been sold at retail. We will also have a Southern California test market in late Q2, early Q3, featuring uniquely formulated energy drinks under the P90X and Insanity label.

We will then have Insanity nutritional supplement line coming out in late Q3, early Q4. We're developing a ready-to-drink Shakeology superfood protein drink in Q3 and Q4. It requires no mixing. We'll have innovative new protein bars from P90X and Shakeology as well, hopefully in Q4 of 2026. We're also considering a complete revamp of the existing line of Beachbody supplement products, putting them under the new BODi brand name and in new packaging in late 2026 or early 2027. The pipeline is fertile, it's full, there's a lot of new nutritional elements in there, and we're really excited about it.

Importantly, now that we no longer have the constraints of the incredibly high 40%-50% sales commission structure of the former MLM model, we can now price our nutritional products at very affordable price points that are dramatically lower than our previous nutritional products were priced at. With brand names like P90X, Insanity, and Shakeology, we will walk in the door of retail with very high aided brand awareness levels, given that millions of people have been exposed to or been part of those brands previously. We now have the ability to price our products at much lower price points, which represents a huge opportunity not only at retail, but in our DTC business as well at BODi.com. Our intention is to introduce P90X supplements and the new seven-serve $34.99 Shakeology form factor in April 2026 on our new Shopify website.

The retail rollout of these products in brick-and-mortar will follow beginning in May 2026 with some exciting news when Shakeology will debut in Sprouts Farmers Market in the seven-serve $34.99 bag. There will be many other retail accounts who will carry the Shakeology and the P90X supplement lines as well, and our retail selling partner, Advantage Solutions, is in the process of presenting those lines and securing confirmation and orders over the next four to eight weeks.

With the impressive financial turnaround at BODi, the highlights of which include recording positive operating income for the full year of 2025, positive adjusted net income for the full year of 2025, nine consecutive quarters of positive adjusted EBITDA, a cash balance of $39 million at December 31st, 2025, which is 56% above our outstanding debt level of $25 million in Tiger Finance, a 44% reduction in interest charges versus our previous Blue Torch debt. Massive operating leverage being built into the P&L as a result of a lowering of the EBITDA breakeven level from over $900 million prior to my arrival down to a $180 million breakeven level today. Lastly, achieving the financial aspect of the turnaround a year ahead of our original schedule.

Combined with the 2026 debut of the new products and programs within our impressive innovation pipeline, BODi is poised to complete the total turnaround of the company by the end of 2026, a full year ahead of schedule. We're looking forward to the second half of 2026 when the first clean year-over-year top line comparisons can be made as the legacy business model elements from the MLM will have burned off by then, and we can clearly describe how the new products and programs that we're introducing throughout 2026 are doing and whether or not they're contributing to our number one goal of returning to year-over-year top line revenue growth to match the impressive year-over-year financial turnaround performance. With that, I'd now like to turn the mic over to our Co-Founder and CEO, Carl Daikeler. Carl.

Thanks, Mark, and thank you all for joining us today. Our Q4 results, which Mark introduced and Brad will detail shortly, demonstrate the operational momentum we've been building throughout 2025. The progress we've made with the financial turnaround has created an extremely efficient business, which is now in such a good position to accelerate into this exciting pipeline of new offers that we can maximize in multiple sales channels. As we said in our last earnings call, the end-of-year offers we launched going into Black Friday and Cyber Monday and the holidays, and then into the first quarter of 2026, were well stacked to maximize the new model. We saw productive demand for the new Shaun T lifting program called DIG IN, bundled with the special holiday and new year subscription offer.

We also launched our high volume, low price tier of over 400 microdose fitness workouts that are 10 minutes or less to serve the over 185 million people in the U.S. who are overweight or obese or who just don't have time or the inclination to do longer workout sessions or who are intimidated by the gym. That tier, which we call 10 Minute BODi, is driven by a free 10-day trial and a very compelling $10 a month price point. The 10 Minute BODi launch has shown instant popularity of microdose fitness programming, with about 8% of our viewership already choosing these shorter formats in the last couple of months. Looking ahead, our restructured performance marketing and creative teams are prepared to support our most exciting launch from our innovation pipeline, P90X Generation Next.

After this last year of restructuring in 2025, we now have the people, the agencies, the strategies in place to maximize this launch and the rest of our plans for the year. In fact, we launched the new P90X program in early February to a packed house of media and influencers in New York City, which will carry that launch momentum into the second quarter as we debut the P90X branded supplement line, both direct-to-consumer and at retail. Here's what's most meaningful about this supplement launch. Our supplement strategy represents a significant business model shift. What many people never realized about the company is that historically, in our peak year of $1.2 billion in annual revenue, fitness accounted for only 34% of that revenue or about $400 million, while other revenue, driven primarily by supplements, accounted for $783 million.

Our MLM model at that time required a network compensation structure that limited margin and pricing flexibility to really scale. Now, without that obstacle, we'll soon offer our highly effective supplements under the P90X and Shakeology brands at $15-$35 price points with healthy margins. That's unprecedented for us and significantly changes our economics and potential to really scale into the mass market. This shift in affordability fits well into our proven model of what we call the Total-Solution Pack that people need for healthy lifestyle change, which includes both fitness and nutrition. This approach to the Total-Solution Pack is one of the reasons our customers have always gotten such amazing healthy results at BODi. We've definitely seen that our best years were driven by this combination of effective supplements and fitness.

Our data and analytics team has recently seen a growing trend where cost of customer acquisition offering digital fitness first has steadily increased, while customer acquisition cost when offering nutrition first has actually decreased. It makes sense, too, because the nutrition supplement business has swelled to over 12 times the market size of digital fitness. We're taking all those observations built on the foundation of the power of the Total-Solution Pack of bundled fitness and nutrition, and now starting to leverage three of our most famous and successful brand names into this proven premise, starting with this combination of the new P90X Generation Next program and the new line of P90X supplements and beverages.

The P90X brand already has an incredible 62% aided awareness score in consumer surveys, which gives us a massive competitive advantage in launching this nutrition line in all our sales channels, especially retail. Likewise, we'll be advertising Shakeology direct to consumers, which as we've mentioned in prior calls and as Mark said, Shakeology has already sold over 1 billion servings without ever being offered at retail. The enthusiasm from major retailers for our second quarter Shakeology launch is confirming that this product is ready to scale past its legacy in the MLM. In late Q2 or early Q3 2026, we'll be launching an irreverent energy beverage line under the Insanity brand, targeting a younger, more male-oriented demographic. We'll also be launching a science-backed performance energy beverage line to serve a broader male and female target customer under the P90X brand, both in a Southern California market test.

Our goal is to read the performance of those new products in the test market, make any necessary modifications, and be ready for a national rollout of the Insanity and P90X energy drinks in 2027. In terms of marketing support, this is where it gets really interesting. Our D2C marketing model, which we've refined over nearly 30 years, is designed to be self-liquidating, meaning the advertising basically pays for itself through sales generated. Now that marketing spend for our nutritional lines will not only drive profitable direct sales, it will also drive traffic across retail, Amazon, affiliate channels, and through our customer database, which is already showing very promising signs of productivity with new supplement offerings.

Every one of those customers who enter the ecosystem with a nutrition purchase will get a free trial offer to join the fitness platform, which is a major value add and a competitive advantage in the supplement space. This rising tide of supplement promotion with the value add of digital fitness will give us efficiencies that will float all ships in all channels. Again, the power of the Total-Solution Pack, which has driven customer results for almost 30 years, is alive and well. We're just attenuating that relationship of nutrition and fitness to take advantage of current tailwinds. As I mentioned last quarter, all of this will be supported by our transition to the Shopify e-commerce platform and its ease of checkout and high conversion metrics to maximize all this traffic starting in late March.

We're in a very strong position with the agility of a startup, thanks to our new operating efficiencies, combined with our portfolio of proven, well-known brands and a customer database that took decades to build, all running on an incredibly efficient structure. With nine quarters of positive EBITDA and our second consecutive quarter of positive net income since we went public in 2021, it's clear this turnaround now has some stability. As we execute our first full year with this completely new business model, the team is invigorated and hustling to maximize our momentum, responsibly deploying capital in the first half of 2026 and gradually ramping up into 2027. Okay, so let's get the details on Q4 results and the 2025 full year performance from our CFO, Brad Ramberg. Brad?

Thank you, Carl, and thank you everyone for joining the call today. I will review our Q4 results and provide our outlook for the first quarter of 2026. We continue to make significant progress on our transformation and have successfully re-architected our cost structure to drive operating leverage. For the quarter, we exceeded our guidance for net income and adjusted EBITDA while producing revenues that were above the midpoint of guidance. Before I get into the details of the quarter, I want to note that the quarter includes a $2.2 million benefit from the reversal of a bonus accrual made in Q3, of which $1.9 million benefited operating expenses and $300,000 benefited the cost of revenue, and the elimination of an additional planned $2.2 million bonus accrual in Q4 that was included in our guidance.

We generated our second consecutive quarter of net income and our ninth consecutive quarter of positive adjusted EBITDA. For the full year, we are proud that we generated operating income and adjusted net income both for the first time since going public in 2021, while also driving positive free cash flow. Now I'd like to provide more details about the quarter. Total revenues of $55.5 million declined 7.3% sequentially and declined 35.7% year-over-year in line with our expectations as we continue our strategic transformation. Revenues continue to be impacted in the near term by our shift from a multi-level marketing platform to the omni-channel model. Consolidated Q4 gross margins were 74.5%, reflecting a decrease of 10 basis points sequentially, but an increase of 400 basis points compared to the prior year.

We are pleased to report the consolidated gross margin remained at the high end of our target, underscoring our strong operational execution. Moving to Digital and Nutrition & Other revenues. It should be noted that the year-over-year decline is heavily influenced by remnant revenue from the former MLM legacy business, which was shut down December 31, 2024. Therefore, there's a component of the MLM legacy Digital and Nutrition revenue in the 2025 numbers, which prevents us from having a direct year-on-year comparison to what we are forecasting for Q1 2026. Digital revenue decreased 5.8% sequentially to $34.3 million and 31.9% year-over-year. Digital revenues reflect continued pressure on our Digital Subscriptions, which decreased 3.3% quarter-over-quarter to approximately 870,000 and declined 18.7% compared to the same period a year ago.

Nutrition & Other revenue decreased 9.6% from the prior quarter to $21.2 million and decreased 39% year-over-year. Nutrition subscriptions increased 14.3% sequentially to approximately 80,000 and fell 11.1% year-over-year. Digital gross margin was 87.3%, decreasing 80 basis points sequentially, but up 140 basis points from prior year. Our Digital gross margin was in line with our target. The continued strength in year-over-year gross margin was primarily due to a decrease in digital content amortization and depreciation due to more disciplined production and fixed asset spending. Nutrition & Other gross margin was 53.7%, flat sequentially and up 140 basis points versus last year. Nutrition gross margins exceeded our target.

Excluding certain one-time benefits, the gross margin would have been 50.5%. Operating expenses for the quarter declined 16.4% sequentially and 64.6% year-over-year to $33.2 million. Note, the prior year included a $20 million impairment of goodwill. Selling and marketing expense as a percent of revenue increased 40 basis points over the prior quarter, but declined a significant 1,280 basis points year-over-year to 32.3%. This significant improvement over the prior year stems from eliminating partner compensation following our December 31, 2024 exit from the multi-level marketing channel.

Enterprise technology and development expense was 15.7% of revenue, down 170 basis points sequentially and 990 basis points year-over-year, driven primarily by lower depreciation due to lower tech spend necessary to support our new business model. G&A was 11.8% of revenue, decreasing 510 basis points sequentially and 160 basis points from the prior year. The sequential improvement reflects reduced personnel expenses from prior restructurings and lower professional fees. This disciplined expense management delivered strong profitability. Operating income for the quarter was $8.2 million compared to a loss of $32.9 million in the prior year, marking our second consecutive quarter of operating income.

Q4 2025 net income was $5.2 million, our second consecutive quarter of net income compared to a net loss of $34.6 million last year. For the full year, net loss was $2.9 million versus a $71.6 million net loss a year ago. Adjusted net income was $7.2 million for the quarter versus a $4.7 million adjusted net loss in the prior year. For the full year, adjusted net income was $3.5 million compared to a $31.2 million adjusted net loss last year. Adjusted EBITDA was $12.9 million compared to $9.5 million sequentially and $8.7 million in the prior year, marking our ninth consecutive quarter of positive adjusted EBITDA.

For the full year, adjusted EBITDA was $30.8 million versus $28.3 million in the prior year. As Mark discussed, in early January of 2026, we executed an amendment for our ABL facility which modified our covenants. Most importantly, as long as our cash balance exceeds our extending debt principal by $4.6 million, our key covenants are not subject to testing. Our cash balance was $39 million compared to $33.9 million in the prior quarter and $20.2 million last year. Our net cash position is $15.4 million. Cash generated from operations for the full year was $21.8 million compared to $2.6 million in the prior year, while free cash flow was $17.4 million compared to -$2 million in the prior year. Now turning to our first quarter guidance.

While we are pleased with the execution of our transformation, I want to reiterate that we just completed the first year of our pivot away from the MLM model to our multi-channel marketing and distribution model. Please keep in mind that this guidance should not be compared to Q1 2025 because Q1 2025 still had significant revenue recognized from the legacy MLM model. As discussed, we significantly lowered expenses in our revenue break-even point. This shift has opened new growth channels that we could not previously access, and we're very excited about the opportunities ahead. We now have a stronger balance sheet and a more viable long-term business model. As with companies that are undergoing a transformation, it will take time to develop traction in these new lines of business.

As the tail of our legacy business winds down. We expect that the first time we'll be able to do a year-over-year comparison of our new business model will be comparing Q3 2026 to Q3 2025. We expect first quarter revenues to be in the range of $49 million-$54 million, net income to be in the range of -$2 million to $1 million, and adjusted EBITDA to be in the range of $4 million-$7 million. The outlook for net income does not include the change in fair value of warrant liabilities as it is significantly impacted by the change in the company's stock price, which cannot be estimated. We continue to transition to our new business model. We want to provide additional updates to help you contextualize changes in our new financial model.

For the quarter, we anticipate revenues to approximate 63% Digital and 37% Nutrition & Other. However, in line with the strategies we articulated on this call, we currently expect a notable shift by the end of 2026 to a much larger percentage of our business being in Nutrition & Other, and the attendant margins that come along with it. For the quarter, our Digital gross margin target is expected to be in the range of 86%-88%. Our Nutrition & Other gross margin target is forecasted to be in the 44%-50% range, which is in line with our volume expectations and certain promotional efforts planned. Our total gross margin target is expected to be in the 69%-73% range. Over the last two years, we've made considerable progress against our business transformation.

We've significantly lowered our break-even point and strengthened our financial position, putting us on a solid financial foundation to execute against our growth initiatives that will drive long-term shareholder value. I look forward to updating you on our progress in our next earnings call. I'll now turn the call back over to Mark for closing remarks.

Thanks very much, Brad, and thanks for everybody for attending today. Tamia will open it up now to questions. There should be some people in the queue. She will take the questions as they appear, and then at the conclusion of the questions, I'll come back on for some closing remarks.

Thank you. We will now begin with the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. The first question comes from Susan Anderson with Canaccord Genuity. You may proceed.

Hi, good afternoon. Alec Legg on for Susan. Thanks for taking our question. You guys have done a great job lowering the break-even point over the last few years. I guess what's next for management's priorities, if you had to kind of rank them? Is it still a focus on driving profitability or maybe starting to shift some of that towards returning to growth through all of the new launches and innovations planned for this year and into 2027? Thank you.

Alec, great question. This is Mark. You know, listen, we've worked so hard to rearchitect the company to be focused on profitability that's just not something we're probably ever gonna take out of our primary focus. That being said, this innovation pipeline, which we articulated is pretty fertile. The beauty is a lot of what you're gonna see, I believe, at this point is a reallocation of the marketing spend to the newer shiny new initiatives. Rather than making a large increase in the amount of the marketing spend, we're just gonna basically redeploy that capital into what we believe is the highest and best use. You'll see an increased focus, as Carl alluded to, on nutrition. Typically with us, nutrition has a much lower customer acquisition cost and gives us a great yield.

It also gives us a migration path over to the digital fitness business. I think that the takeaway is financial discipline will never go away. People are enjoying the fruits of our efforts in terms of watching what's happened to this company financially, so people wanna stay on that. It's kind of like getting yourself fit. You know, you don't want, you don't wanna lose your newfound fitness. We have a lot of exciting things that we can invest in. Look, if we see green shoots and the profitability allows for it, would we do additional investment spending? Sure. For right now, we think we've got an ample media budget that if we allocate it against the right news will bear fruit.

Thanks, Mark. Just to follow up, I know it's still, it's about a month in, but I guess any early reads on the P90X launch, has it brought in new customers to the platform, reactivated old ones? I know you talked about the reactivation campaign or maybe a good mix of both.

Carl?

Yeah. We're very pleased with the reaction from our customers and subscribers to the release. It's obviously a brand-new program that is paying homage to the legacy that was created 15 years ago when we launched the original P90X. We did this big activation in New York and we've had millions of impressions both in earned media and paid media. We're seeing solid uptake within our subscriber base of the program, but we're also, quite honestly, just a month into the release of it. This first wave of customers who are doing it, they're gonna be like the next wave of proof. We'll be surfing this launch for probably the next 12 months.

As we continue to gather success stories and demonstrate to both our current subscribers and new prospective subscribers that this program works, that people, not just extreme athletes or extreme fitness people can do it, but beginners can do it with a modifier and, people who are just trying to get back their athletic body from when they were in high school and college. The initial indications are good, but it's also early days, and this next wave of success stories are what sort of propel the momentum of a new program like this.

Thanks, Carl. I'll turn it back.

Thanks, Alec.

Thanks, Alec.

Thank you. The next question comes from Eric Des Lauriers with Craig-Hallum. You may proceed.

All right. Thanks for taking my questions, and congrats on another very impressive quarter and impressive year here.

Thank you, Eric.

My first question is just a, you know, just a bit of a follow-up to the early read on P90X. Just, I wonder if you have an early read on the 10 Minute BODi, you know, consumer response thus far. On this note, if you could just kinda clarify. I heard you mention 8%, I think, of your customers are essentially doing this sort of, I think you call it microdose, you know, kinda ten-minute fitness programs on your platform. Was that all 10 Minute BODi, or are there other sort of microdose fitness programs that you have on your platform as well?

Thanks for the question, Eric. Yeah. Very pleased with the response to 10 Minute BODi. Again, these things, they start to grow, right? You start to learn what channels work best, what media platforms work best, what creative messaging works best. Yes, it's actually not 8% of our subscribers are using it, but 8% of the viewership for the entire platform is coming from ten-minute or less microdose fitness workouts. So we've got five-minute workouts, eight-minute workouts, and that's all part of this 10 Minute BODi subscription, which as you recall, the exciting thing about the subscription is it gives us the lever that, you know, we saw Planet Fitness do so well with, and that's high volume, low price.

We're advertising 10 days free trial of our full micro dose fitness catalog, which then rolls into a $10 a month subscription. However, people coming in to subscribe or take that 10-day free trial also then get offered the $19 full subscription. The thing I'm most pleased about, I won't get too specific, but I will say I'm quite pleased with what the conversion is of people who come in with the intent to buy the $10 a month subscription who actually then level up to the full subscription, which is a similar model that we've seen offline that grew Planet Fitness so well, and we're starting to see that same dynamic in this virtual fitness environment.

Again, still early days, just launched it around Christmas time, but we're seeing strong uptake, and it's frankly helping us do exactly what we said. That is reach the 185 million people who are overweight or obese, not inclined to do a full program, definitely not gonna join a gym to do a 10-minute workout program, but are just looking for a way to fit it in their schedule. We think this really has some great running room, particularly in conjunction with the focus on nutrition. That combination is gonna be a Total-Solution Pack that helps us reach this huge TAM. Good signs, and we think good runway ahead of us.

You know, Eric, it's

Thanks.

This is Mark. What's interesting is, especially on the 10 Minute BODi, because we are going after the 185 million people who largely don't exercise. Really the first thing you have to do is build awareness, then you gotta build reception, then you have to build exploration into the program, and then build conversion. Very different when you're marketing a fitness program to a fitness audience. When you're marketing a fitness program to an audience that does not partake in fitness, your gestation period is longer and normally would be, because they have to first be aware of it, then they gotta look into it, decide if they wanna do it, and then convert. We've known that all the way through.

This is a long-term play by the company to make sure that we've got a product offering to this massive TAM of people who have previously exhibited behavior that would say they don't wanna do 45-90-minute workouts. That's for the people who are already in the fitness business.

That's all very helpful and sounds like you guys have done a great job thus far on this sort of different or new marketing approach. I mean, it sounds like you have very great uptake already. Congrats on the initial success and excited to see what's to come. My next question is on the nutritional brick-and-mortar rollout. First, I mean, a huge congrats on announcing Sprouts. I mean, you know, what an excellent first customer.

Yeah

Just wondering if you could delve in a bit deeper to the extent that you're able to share how the conversations between other retailers and Advantage Solutions are going thus far, and if we should think of, you know, any other help in terms of channel penetration, like should we continue to think of grocery as being the initial channel that we should look for for these early wins? Or I guess just how broad are these, you know, early conversations going with retailers? Thank you.

Yeah. We have sent out, I mean, dozens of what are called sample sets, which is when the brokers go and present this to the buyers, if the buyers have interest. They request what's called the sample set, so they can actually see the product. Then the way that works is they then take that to a buying committee, which then makes a decision, puts it into a planogram, and gives you a target date to get in the store. We right now, through Advantage Solutions, have a lot of these sets out to people who are going through the quote review process. Yes, a lot of the initial will be in the grocery channel. Shakeology going into Sprouts Farmers Market, a big deal.

We just heard today, I can't share it because I don't have anything in writing yet, but we did hear today from our nutrition division that there is a multi-hundred store chain, I can't say the trade class, who wants to put in the entire Shakeology line, all SKUs. Again, this is gonna be a momentum that's gonna build throughout, you know, Q2, as we talked about. We will be in store in Sprouts, it looks like in May, which is great. As we get into Q3, these buying committees that receive these sample sets who hopefully will have made positive decisions to put the product in for both P90X and Shakeology will start to bear fruit.

Remember, though, we're launching the new Shopify platform in a couple weeks for BODi.com, and that's when the new P90X and the new Shakeology form factor will be available direct to consumer, both to our current users in our database, our former users, and people show up at the site. The DTC business for P90X supplements and Shakeology will lead the brick-and-mortar rollout just from a timing standpoint. Then we'll start marketing it using our various influencer media tools at the end of April and into May.

That's all very helpful and, very encouraging. Congrats again on all the progress so far. Thanks.

Thanks, Eric. Appreciate it.

Thank you. The following comes from Michael Kupinski with Noble Capital Markets. You may proceed.

Thank you for taking my questions, and congratulations on an excellent print. Yes, I just wanna follow up. Exciting news on the Shakeology and the Sprouts supermarkets. I was just wondering how many stores will that include? Is it all 484 stores beginning in May?

No, it won't. It'll be a component, a meaningful component, but it'll be a component of that.

Gotcha. In terms of the fact that your implication in terms of Q3 kind of showing revenue growth, can you kind of just break out for us in terms of your thoughts of what you anticipate that you will achieve by then? I mean, are you anticipating that-

Yeah

Like for instance, will you be in all 484 stores with the Shakeology? You know, just kind of lay out the timeline maybe of what you anticipate to kind of see in delivering the revenue growth.

Yeah. Just to be clear, when Brad talked about this, he talked about that Q3 of 2026 will be the first quarter where you can do a clean year-on-year comparison, and then hopefully we can then report on the progress of the traction of the items from our innovation pipeline. He did not say and did not make a projection that we will grow in that quarter because that would be giving guidance beyond the quarter in front of us, which of course we don't do. Not to say that it won't grow, but we're not making a projection about growth for Q3. Logically for Sprouts, it's unlikely that you will be in those stores and then three months later go to the whole chain. It probably doesn't work that way.

You're gonna read the component of stores that you're in, which is a meaningful number, and then at some point, yes, you will probably go chain wide. It usually doesn't happen in a two- or three-month period. Then the other retailers, we believe, Michael, will have started to show that we're in the store on the shelf with both P90X and Shakeology by Q3, and we'll start to be able to read, one, how much incremental business are we doing DTC because of the advent of these new products. Two, are we getting a better penetration rate with our digital subscriber base? 'Cause right now, as you know, Michael, it's less than 10% of our digital fitness subscribers also use our nutrition. There's no way that only 10% of those people are using anyone's nutrition, but they're only using ours.

That's largely because we were so formerly hamstrung by the pricing strata of the MLM that we were selling $50-$130 products in nutrition. Today, the P90X line is $15-$35, and the new Shakeology form factor is $35, $34.99. We're in a whole different ballgame in terms of trying to get cross-pollination, trying to get new people who land at the site, and trying to get the 8 million former BODi members, probably $1 billion-$1.5 billion of former nutritional revenue is in there to try to get them to now look at these new products.

We think the confluence of all of these spokes on the wheel will start to show in Q3 and into Q4, and if that were to be successful, then that would put us in a position where you're comparing us clean to clean year-on-year, and hopefully, that would show some green shoots, which would be great.

Thanks for that clarification and the color. I'm asking this next question because I get this from shareholders. How relevant is the Beachbody brand to the younger fitness consumers today, and especially as you plan to roll out new products targeting the younger demo, just kind of give us some clarification there?

I mean, listen, it's a great question. The reality of it is Beachbody and now BODi are authenticity brand names. So they're not primary destination brand names, they're authenticity brand names. So the Shakeology carries the day, the P90X carries the day, the Insanity carries the day. What we have done historically is use the Beachbody name because of its history to provide an aura of efficacy that we now have with BODi, because we think BODi is more suited to the current world and the current environment that we're in, one. Two, as we wanna branch out into nutrition and as we wanna branch out into the people who don't heavily exercise, having a company called BODi with a fresh perspective is a far better tool than communicating that everybody who uses our products is after six-pack abs and big biceps.

Not that we don't have those products, but our TAM is far greater with the broader Body name. You're gonna see we're working on a concept I mentioned in my prepared remarks, where we may take a lot of our existing nutritional products, not P90X, not Shakeology, and put them under a Body brand name umbrella with dynamic packaging, et cetera, that we could then launch and further entrench the Body brand name and take advantage of the history of the company. Carl, do you have anything to add to that?

I'll add one little side anecdotal proof point that the underlying brands are really what attract the customer. At this activation event for the launch of P90X Generation Next, I was shocked at the number of twenty-something influencers who came up to me and told me that they watched their parents succeed and maybe had the best results and be in the best shape of their adult lives while these kids were growing up. They're in grade school. Now this was their chance to participate in an extreme fitness program that they can do at home. The trainer, Waz Ashayer, appeals to this 20-something, 30-something year old who's looking for extreme results that are very convenient right at home.

On the other side of that, we just got finished shooting some workouts, 10-minute BODi workouts, that are designed for people who are 50, 60+. We get to attract the demographic under the overarching brand, the brand that stands for holistic fitness and health. We get to attract the demographic based on the content and the nutritional solution that we pair it with. That's what gives the company incredible flexibility. That's the beauty of content, is we can morph the target based on what we create rather than perhaps an equipment or brick-and-mortar type of strategy, and that gives us great flexibility and breadth.

You'll see us, Michael, going forward. You'll see us using the BODi brand name more in an authentication vein to help build its awareness of these high-awareness products that we're marketing. We're definitely going to make a transitional focus to make sure that the BODi brand name raises its awareness and can take advantage of the legacy of the prior Beachbody Company in terms of being an expert coming to the marketplace.

Terrific. That was extremely helpful. Thank you very much.

Thank you, Michael.

Thank you. Next question comes from George Kelly with Roth Capital Partners. You may proceed.

Hey, everyone. Thanks for taking my questions. First, just an accounting question on Q4. Brad, I think I just wanted to make sure I had it right. There was a $2.2 million reversal that benefited the OpEx lines you gave. I guess there was a small component in COGS as well. There was an additional $2.2 million that was baked into guidance. Effectively, it was a $4.4 million benefit to guidance. Did I just repeat that correctly?

Hi, George. Yes, this is Brad. You did repeat that correctly. That is right.

Okay, excellent. Thank you. Second question. There was a lot of discussion in the prepared remarks just about you having an opportunity to sort of adjust pricing, and you went through the new P90X pricing stuff in Shakeology at the different form factor. Within Shake, you know, on a per serving basis Shakeology, like, the pricing is still pretty elevated. I'm wondering if there's a point over the next year or so where you would contemplate just lowering, you know, once maybe your retail business is developed or I'm not sure what it would take, but might you do more of a per serving pricing shift at Shakeology?

That's a great question, George. I would say the following. Our per serving price today on the seven serve is about $4.99, something around just under $5. We are positioned, as you know, because we've got these 100 different ingredients and all the superfood ingredients in addition to protein, we're positioned as a premium product because we give you all of these extra benefits initially. We wanna be priced at the upper end within that marketplace, whereas the pure solo protein powders are priced less. That's not our direct competitor because we're a superfood with adaptogens and all of the other things that we've got in the Shakeology product. If we were just a protein powder, it might be a different ballgame, one. Two, we're gonna see how this performs in the retail market.

You'd always like to take the superior product, which we have, and go out with a more premium positioning because that margin flexibility gives you the ability to do more marketing, more sampling, more trial, more local, participation events. You've got the margin to be able to do that. That's been our strategy. Certainly, we have the opportunity both at retail and direct-to-consumer, as opposed to lowering the absolute price to use a promotional well where there are points at which we can put this thing on promotional pricing, and will give us the ability to make a value statement because our regular retail price would be $34.99. Now yours for, I'm making this up, for $29.99. Whereas if you just lower the absolute price of the product, then you're just an EDLP, which is everyday low price versus a high-low strategy.

As you know, grocery follows two pricing strata. Some people are EDLP, some people are high-low, and I think the high-low gives you more flexibility. My strong preference would be to keep our premium positioning and then if we need to promote off of that.

I'll just add that the reason this product has sold over 1 billion servings is people can tell the substance of this formulation. We've always had pressure internally and externally to perhaps tweak the formula to lower the price and have the optics of a lower price formula. We've held the quality and potency because it is so distinct. That's our unique proposition, is that you can feel the difference. That's why we think it's gonna be a good decision for retailers to put it on the shelf because this one stands out because of the resilience of this formulation. You really can tell the difference.

I'll send it back. I mean, we're selling, you know, a tub of whey protein on P90X for the same price that we're selling a seven-serve in Shakeology because the additional ingredients in Shakeology is what makes it a premium product. I mean, at $129.95, which is what the company sold it for the last umpteen years, you were at about $4.33 per serving. Normally, as you know, George, when you come down in form factor, you go up in price per serving. Our price per serving on the seven-serve is $4.99, on the 30-serve, it's like $4.33. We're in the same zip code.

Okay. Last question I have for you, like I said, two-parter. Before the Sprouts launch, have you done any kind of testing in store at Sprouts? Second question is, do you have any additional retail distribution secured after Sprouts? That's all I had. Thank you.

We have not done any testing there. The testing, as Carl alluded to, has been 15 years and $3.4 billion and 1 billion servings, which a lot of the buyers have said, you know, everybody knows Shakeology, thank God it's finally available at retail. That's the answer to that question. In terms of the additional retailers, as I was saying in my earlier comments, when Eric asked the question, we have, you know, dozens and dozens of sample sets out to the retail buying community that our brokers at Advantage Solutions have taken out there. They're all under review by the buyers and then ultimately the buying committee, and we're waiting for feedback, most of which will happen within the month of April and early May.

We will have, you know, hard numbers about who is taking the initial launch and when it will be on shelf. Our anticipation is we'll be in late Q2 and into Q3, we'll start getting many more retailers. Like I said, we have one I can't talk about because it was an oral, not a firm purchase order yet, which is coming, but it's a multi-hundred store chain that's planning on putting Shakeology, all flavors, all SKUs. We just learned that this morning, so hopefully that will materialize with a written purchase order, and then we can talk about it.

Thank you. The final question comes from Alex Hantman with Sidoti & Company. You may proceed.

Hi, good afternoon. Thanks for taking questions.

Sure.

Give me, you know, a little bit beyond retail. I'm curious what you've learned so far from the Reebok relationship and whether that channel can become a meaningful contributor to subscriber adds, and if there's an opportunity to partner with similar brands.

Yeah. I think it's early days, certainly on that partnership and that is a subscription model as well. We will certainly read that closely. Regardless of where that nets out, whether it's great or whether it doesn't end up being great, we just brought in somebody to head up partnerships, and our whole focus is going to be who can we align with where we become a value add to their customer base and reciprocal as they become a value add to our customer base. Because we've now got a much broader range of products, both in terms of our 10 Minute BODi, the new P90X program, now these new nutritional products, the new form factors, our more attractive overall price points. You know, we're selling $15-$34 product. We didn't have that before.

Our ability to go out and craft partnerships because of that is way more compelling now than it would have been six months ago. I'm hopeful that over the next twelve months you'll start to see some of these partnerships materialize because everybody acknowledges the power of our brands. Now that we've got some pricing power to go along with that, I think it'll bear fruit.

Thanks, Mark. Great context. Just to follow up on something from the 10-K. You know, I think you mentioned GLP-1s as both a tailwind, you know, and a potential headwind. Just curious, you know, are you hearing customers talk to you about that? Is it affecting, you know, any sort of meal planning that you're doing or formulations that you guys are making?

Well, I would say that it's actually we see it far more as an opportunity for us because every person who makes the investment in a GLP-1 weight loss pharmaceutical is gonna need to remediate the prospect of muscle loss by doing some exercise and by fueling themselves well. Shakeology is an absolute ideal, easy solution for people who are obviously looking for an easy solution. So that's been a quite productive line of communication and messaging in our marketing and advertising. But likewise, we've also produced content on the platform specifically for the GLP-1 user. Again, this is not a person who was seeking complete lifestyle change. They're looking for a bit of a biohack, a shortcut to try to get some results and get traction on a healthier lifestyle.

You can imagine how something like 10 Minute BODi and specifically content designed for a GLP-1 user to help them with resistance training and cardio in a way that's manageable and fits into their lifestyle, that that'll be quite attractive. The convenience of doing at home is just the perfect formula. We actually feel quite well aligned with the growth of the GLP-1 sector and also quite honestly offering GLP-1 type formulations into our large database of people who've already raised their hand and said, "You know, we'd like to find a way to lose weight." Perhaps they're not a current subscriber, but now they're in our database that we can make compelling offers to them so that they get access to the best solution available. We see it as a tailwind.

If you read the research that's been published on GLP-1, what it basically says is that when you go on a normal diet without a drug and you lose 20 pounds, approximately 20%-25% of your loss is muscle, and the other 75%-80% is fat. When you lose weight on a GLP-1 drug, based on all the research that we've seen, you lose between 40%-50% of that weight in lean muscle. Your lean muscle loss, based on the research we've read, is double when you do it through a drug versus when you do it through a regular caloric restricted diet.

To Carl's point, we become the perfect adjunct to anybody on a GLP-1 drug, because otherwise, you know, you run the risk of getting what people would call skinny fat, which is you've lost the weight, but you have no musculature. If you're over 40, that is definitely not what you wanna be doing because your musculature, your musculoskeletal strength has everything to do with your balance and not having falls and fractures and things of that nature. The more that category expands and now that they're offering it in pill form, it looks like not just injection, syringe injection, I think the more relevant we become as a partner to that as opposed to you viewing them as a competitor.

Great context. Thank you. That's all from us.

Great. Thank you very much.

I'll pass that over to the team for closing remarks.

Operator, any more questions?

No.

Listen, this has been great. Really appreciate everybody attending today. We are obviously thrilled with our performance in 2025. It was beyond our expectations, and we're really excited about the innovation pipeline for 2026 and hopefully watching that bear fruit, especially as we get towards the second half of the year. As always, if anything comes up, please either reach out to us directly at the company through Brad Ramberg, our CFO, or through ICR. Thanks, everyone, have a great day.

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.