NXPL

Welcome to the NextPlat first quarter 2026 earnings conference call. Certain statements made during this conference call constitute forward-looking statements. These statements include the capabilities and success of the company's business and any of its products, services, or solutions. The words believe, forecast, project, intend, expect, plan, should, would, and similar expressions in all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties, and other factors, any of which could cause the company to not achieve some or all of its goals or the company's previously reported actual results, performance, finance, or operating, including those expressed or implied by such forward-looking statements.

More detailed information about the company and the risk factors that may affect the realization of forward-looking statements is set forth in the company's filings with the Securities and Exchange Commission, the SEC. Copies of which may be obtained from the SEC's website at www.sec.gov. The company assumes no and hereby disclaims any obligation to update the forward-looking statements made during this conference call. Joining us on the call today are David Phipps, Chief Executive Officer, Amanda Ferrio, Chief Financial Officer, and Birute Norkute, Vice President of Healthcare Operations. I will now turn the meeting over to David Phipps for opening remarks.

Good morning, welcome to NextPlat's first quarter 2026 results conference call. Thank you for joining us. On today's call, we will discuss our first quarter results and highlight many of the improvements now being delivered in our business because of our turnaround efforts. In addition to discussing the results of the quarter, we will also share with you some insights into what we expect for the remainder of 2026, specifically the progress we are making on achieving our growth and profitability goals. As is customary, I will begin today's call by briefly recapping the results of the first quarter. I will turn the call over to Birute Norkute, our Vice President of Healthcare Operations, to discuss that segment in more detail, and then turn the call over to Amanda Ferrio, our Chief Financial Officer, to review our financial results.

Following that, I will make closing remarks and then conclude the conference call by responding to questions that were submitted by our shareholders. Let me start by commenting on our Nasdaq listing status. On April 27th, we announced that we regained our compliance with Nasdaq's minimum bid requirement as a result of us completing a required reverse split. As I indicated on our last call, this was not something we wanted to do. It was required to maintain our listing on Nasdaq, which we believed was in the best interest of our shareholders. With that behind us, instead of looking back, we are now 100% focused on delivering on the promise we see of a bright future for our company, as evidenced by our significantly improved Q1 operating results announced today.

These improvements are the direct result of our efforts to turn the business around and position it for long-term profitable growth. As you can see, we now have a fundamentally improved business featuring dramatic margin expansion, supported by a leaner operating structure and an expanding domestic and international new business pipeline. With the turnaround largely complete, we are now looking to add scale and expand the scope of our business, in particular in our healthcare operations. This is highlighted by our expansion into all 50 states from our current base in Florida and other developments which we intend to announce shortly. I will discuss these and other critical developments in a minute. Looking at the first quarter, the positive trends established late last year, and as outlined in our previous guidance announcement, have continued. The business is now beginning to deliver tangible financial results.

This is especially visible in terms of improved profitability, as reflected by a consolidated gross margin percentage, which is now at record levels. This is largely driven by a dramatic improvement in our healthcare business, which represented about 68% of our revenue in the first quarter. As we previously indicated, our efforts here were focused on new business development, targeting higher margin, 340B covered entities and long-term care facilities, securing medication fulfillment contracts, re-engagement with former clients, and improving customer service. Initiated late last year, these efforts are now delivering sustainable margin improvement and are expected to support revenue growth later this year. This is a major contributor to our ability to achieve operational profitability in the latter half of 2026.

As evidenced by our first quarter results, the combination of new higher margin revenue and a greatly streamlined and cost-efficient operating structure means that we have created a clear path to meaningful reductions in operating losses in the second half of the year. At this point, I'd like to now review our business and provide some additional insights, which I believe will be helpful for investors in measuring our progress. In our healthcare segment, we are pleased to report the following improvements in operations during the first quarter. Revenue continues to be down on a year-over-year basis, as expected, our focus on attracting and supporting the needs of contracted 340B entities, long-term care providers, and other healthcare facility operators is delivering bottom-line improvements. Furthermore, momentum in this segment is building, having secured new 340B pharmacy service agreements with five new entities, a single quarter record.

These entities are now onboarding a process which usually takes about 90 days to complete before they can start directing prescriptions for us for fulfillment. As such, we believe these new customers will start contributing to our revenue during the third quarter. The contributions for our medication fulfillment contracts continue to surpass expectations as we filled an average of 7,500 prescriptions per month to the contract facilities in Florida. The service fees we recognize from these fulfillments are driving significant bottom-line profit improvement each month. In terms of retail, although we remain focused on expanding our contracted services, over the past few months we have seen some improvement in this segment of our business. As we are now demonstrating, a well-managed retail pharmacy operation combined with strong margin discipline, operational efficiency, and strategic customer relationships can continue to generate attractive margins and meaningful profitability.

Birute will comment a bit more on this in just a minute. Finally, as I mentioned earlier, we are now actively expanding the scale and scope of our business, currently through our newly created nationwide partnership. We are now moving quickly to leverage our relationships with current and potential customers and preparing for the launch of a new online e-commerce healthcare website, which will feature an array of popular prescription medications such as GLP-1s and over-the-counter products, including our Florida Sunshine brand premium vitamins and supplements. The new site is expected to go live before the end of the second quarter. Additionally, I can say we're working on other developments here, which we believe will quickly add more scale to our PharmCo operations in the state of Florida, which we hope to announce very soon. In our e-commerce segment, here are the most recent highlights.

We continue to see strong global demand for satellite connectivity products during Q1, generating sales from customers in more than 130 countries. Several European government and military orders received during the quarter have helped to build a strong business pipeline for the coming years, supported by the award of multiple multi-year contracts. These orders, together with the recent growth in demand for satellite-enabled IoT products offered by our partners such as Iridium and Globalstar, have driven IoT sales and recurring revenue to record highs. At this point, I would like to now turn the call over to Birute for her updates.

Thank you, David. As David mentioned, during the first quarter, we continued executing on the operational restructuring and strategic repositioning of our healthcare business with a strong focus on improving margin quality, operational efficiency, and long-term scalability. While overall retail prescription volume during the quarter declined compared to the prior year period, we significantly improved the profitability and quality of our pharmacy operations. Gross margin within the pharmacy business improved to an impressive 39% compared to approximately 20% in the prior year period. This improvement was driven by optimization of payer and product mix, stronger gross profit per retail prescription, and increasing contributions from higher margin 340B relationships and contracted medication fulfillment services. Additionally, beginning January first, 2026, the federally implemented Medicare Maximum Fair Price program impacted reimbursement economics on certain Medicare prescriptions.

While this government program was not company-specific, the updated reimbursement framework favorably affected margins on certain therapies that historically generated lower profitability under prior pricing structures, contributing to overall improvement in pharmacy gross profit during the quarter. Importantly, these results demonstrate that well-managed pharmacy operations, combined with strong margin discipline, operational efficiency, and strategic customer relationships, can continue to generate attractive margins and meaningful profitability. We believe this operating model supports our long-term expansion strategy, including selective acquisitions in strategic markets where we can expand our geographic footprint, strengthen local relationships, and further support covered entities and healthcare providers. We are also continuing to invest in future growth initiatives across both our 340B and long-term care verticals, including expansion of our sales and account management teams to support additional business development opportunities throughout Florida and other strategic markets.

Another important strategic development during the quarter was entering in nationwide fulfillment partnership designed to support our expansion beyond Florida. While the operational rollout and supporting infrastructure are still in development, we believe this relationship creates an important foundation for future national growth. Over time, we expect the platform to support broader prescription access, cash pay opportunities, e-commerce initiatives, and future offerings in high-demand therapeutic categories, including GLP-1 therapies. Overall, we believe the operational improvements implemented over the last several quarters have created a substantially more efficient and scalable healthcare platform, positioning us for sustained margins and growth as additional customers and partnerships come online through 2026. That concludes my remarks. Back to you, David.

Thank you, Birute. At this point, I'll turn the call over to Amanda to discuss our financial results for the quarter ended March 31st, 2026.

Thank you, David. Good morning, everyone. Before I begin, I want to reinforce David's comments regarding the operational and financial progress we are seeing across the company. The initiatives implemented throughout 2025 are translating into measurable improvements in margins, operating efficiency, and overall financial performance. Our focus entering 2026 has been very clear: stabilize the business, improve profitability, reduce operating losses, and position the company for more consistent and scalable earnings. Based on our first quarter results, we believe we are making meaningful progress toward those objectives. For the first quarter of 2026, total net revenues were approximately $10 million, compared to approximately $14 million in the prior year period and approximately $13 million in the fourth quarter of 2025.

While year-over-year revenue comparisons continue to reflect the operational restructuring and evolving reimbursement dynamics within our healthcare business, we believe the more important trend is the sequential improvement we are seeing in margins and operating leverage. Within healthcare operations, first quarter revenue was approximately $7 million, compared to approximately $10 million in the fourth quarter of 2025. The composition of healthcare revenue continued to shift toward higher value and more sustainable revenue streams, including 340B contract services and medication fulfillment services. Pharmacy contract revenue increased to approximately $1.9 million during the quarter, compared to approximately $1.6 million in the fourth quarter and approximately $1.4 million in the prior year period. This continued growth in 340B-related and contract pharmacy services supports improved margins and greater revenue visibility.

At the same time, while retail prescription revenue trends began to stabilize further during the quarter following the operational changes implemented throughout 2025. While retail prescription revenue remains below prior year levels, profitability improved due to higher gross profit per prescription, reflecting changes in dispensing mix, continued margin discipline, and reimbursement changes associated with the Medicare Maximum Fair Price program. Our e-commerce operations continued to perform steadily and remained an important contributor to the overall business. E-commerce revenue was approximately $3.2 million during the quarter, compared to approximately $3 million in the prior year period. Although revenue moderated sequentially from the seasonally strong fourth quarter, the business continues to benefit from stable demand across satellite communications, recurring airtime services, and global e-commerce channels.

We continue to see healthy customer activity in both enterprise and government-related markets, and we believe this segment remains well-positioned to provide consistent cash flow generation and long-term growth opportunities. Turning to profitability, consolidated gross profit for the quarter was approximately $3.4 million, compared to approximately $2.9 million in the prior year period and approximately $2.4 million in the fourth quarter. Gross margin improved significantly to approximately 35% in the first quarter of 2026, compared to approximately 21% in the first quarter of 2025 and approximately 18% in the fourth quarter of 2025. This represents one of the strongest quarterly gross margin performances in the company's history and reflects the benefits of our strategy to improve revenue quality and overall operating efficiency. Operating expenses continue to improve as we maintain disciplined cost controls across the business.

Total operating expenses favorably decreased to approximately $4.5 million in the first quarter of 2026, compared to approximately $4.9 million in the prior-year period and $5.3 million in the fourth quarter of 2025. Salaries and wages decreased to approximately $2.4 million, compared to approximately $2.7 million in the prior-year period and approximately $2.8 million in the fourth quarter of 2025. Selling, general, and administrative expenses also remained well-controlled. These improvements reflect the benefits of the cost optimization initiatives and operational restructuring actions implemented throughout 2025. As a result of the combined improvement in gross profit and operating efficiency, operating loss improved substantially.

Operating loss for the first quarter of 2026 was approximately $1.1 million, compared to approximately $2.1 million in the prior year period and approximately $2.8 million in the fourth quarter of 2025. From a segment perspective, it is important to note that our healthcare operations generated positive segment operating income during the quarter of approximately $24,000, compared to a segment operating loss of approximately $1.2 million in the fourth quarter of 2025 and approximately $0.9 million in the prior year period. This represents a major milestone in the repositioning of the healthcare business and validates the progress we are making in improving overall operating performance. On the balance sheet, we ended the quarter with approximately $11 million in cash and working capital of approximately $14 million.

While cash usage during the quarter reflected ongoing working capital investment and timing related to receivables, we continue to maintain a healthy liquidity position and a conservative balance sheet with no meaningful debt, which we believe provides flexibility to support growth initiatives, strategic opportunities, and continued operational execution. In addition, subsequent to quarter end, we've regained full compliance with Nasdaq's minimum bid price requirement following the completion of our reverse stock split in April. Finally, as disclosed in our filing earlier this week, we established an at-the-market equity program with H.C. Wainwright to provide additional financial flexibility to support potential future growth initiatives, including possible joint ventures or acquisitions. Currently, we do not have any specific plans for the use of this program. Looking ahead, our priorities for the remainder of 2026 remain centered on the following.

Continuing to expand contract-based healthcare and fulfillment services, sustaining gross margins and improving operating leverage, maintaining disciplined expense management, supporting growth organically through recurring and contract-based revenue streams while also evaluating strategic opportunities such as possible joint ventures or acquisitions, improving cash flow performance and positioning the company for sustained profitability. While the macro environment and reimbursement landscape remain dynamic, we believe the actions we have taken over the past year have materially strengthened the foundation of the business. Most importantly, we believe the sequential financial improvements we are now seeing, specifically in gross margin expansion, healthcare segment profitability, and reduced operating losses, provides encouraging evidence that the operational and strategic initiatives implemented over the past year are beginning to deliver measurable financial results. We remain focused on disciplined execution, operational efficiency, and driving long-term shareholder value.

I encourage you to review our financial statements and disclosures in our quarterly report on Form 10-Q for additional details. That concludes my remarks. Back to you, David.

Thank you, Amanda. Before we turn to investor questions, I'd like to make some closing remarks and provide some insights into what we see over the remainder of 2026. Looking at where NextPlat is today, our team is pleased with the execution of our turnaround, implementing the majority of our planned initiatives. Based upon our steady sequential operational improvements, it's clear that we have not only stabilized the business, but we have put it on a well-defined growth and profitability path. Although there is always more work to be done, we believe we now have a foundation that can support the large growth opportunities we see ahead of us. We see several milestones ahead of us in 2026. For our healthcare customers, providers, and patients, we intend to continue expanding the reach of our offerings across the U.S. through new online and physical channels.

In e-commerce, we intend to continue expanding our reach through launching new online marketplaces with a wider array of connectivity and consumer product offerings for consumers, enterprises, and governments. For our investors, we are committed to delivering improved operating results, top and bottom line, and communicating the progress we are making on creating shareholder value based upon solid fundamentals. In conclusion, 2026 represents the start of an exciting new chapter for NextPlat, and we wish to thank our shareholders for their continued support. At this point, we can now conduct the Q&A portion of today's call. We have again asked investors and shareholders to submit their questions in advance, and we would like to thank all of you who did. Question number one. There remain challenges in the retail pharmacy business. Do you still see opportunities in this segment? The short answer is yes.

As Biruté indicated, we firmly believe that well-managed retail pharmacy operations, ones that combine high-touch services with strong margin discipline, operational efficiency, and strategic customer relationships, can generate attractive margins and meaningful profitability, as we are now demonstrating in our PharmcoRx operations. This is certainly true in less dense or more rural areas where there isn't a significant presence of larger retail chains, and as such is a large opportunity we are very actively exploring, which can allow us to quickly and profitably expand the scale and scope of our retail business. Question number two. Can you comment on the turnaround? Are you still working on improvements? If so, what are they, or is it largely complete? As you can see from our results, our plan over the last 9 months has been successful, resulting in significant improvements in nearly all of our operational metrics.

While this effort is largely complete, we intend to build upon this progress by remaining very focused on prudent expense control and on generating high-quality revenue. We are shifting our focus more towards driving growth in the business and leveraging the strong financial foundation we have now established, including adequate cash and no meaningful debt. That is why we are actively exploring ways to add scale to our business, as I previously indicated, and I expect to have more to report on these efforts shortly. Question number three. Can you comment on why the company filed an ATM agreement when you clearly have cash on the balance sheet and no debt? Now that our turnaround is largely complete, as I previously indicated, and we are turning our attention towards growth, we have seen a number of opportunities to expand our business through joint ventures and M&A.

As such, we believe an ATM can provide us with more flexibility in how we pursue these opportunities. As Amanda said earlier, at this point in time, we do not have any immediate plans to access the ATM, and I would add, wouldn't consider it at these current levels. Question number four. Does the company have any update on the status of the ongoing lawsuit? As of today, we do not have any specific update we can provide. We are continuing to work with counsel to resolve the final remaining legal matter as quickly as possible while protecting the long-term interests of our shareholders. The matter remains in the hands of counsel and our insurance company. That was the final question that we received from investors. Thank you all again for submitting them.

Please remember that you can submit your questions at our investor relations email, which is [email protected], or with our IR contact listed on our press releases, Michael Glickman at [email protected]. That concludes our earnings conference call. We look forward to continuing to share with you our progress in the weeks and months ahead. Have a nice rest of your day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Thank you.

Certain statements made during this conference call constitute forward-looking statements. These statements include the capabilities and success of the company's business and any of its products, services or solutions. The words believe, forecast, project, intend, expect, plan, should, would, and similar expressions and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors, any of which could cause the company to not achieve some or all of its goals or the company's previously reported actual results, performance, financial or operating, including those expressed or implied by such forward-looking statements.

More detailed information about the company and the risk factors that may affect the realization of forward-looking statements is set forth in the company's filings with the Securities and Exchange Commission, the SEC, copies of which may be obtained from the SEC's website at www.sec.gov. The company assumes no and hereby disclaims any obligation to update the forward-looking statements made during this conference call. Joining us on the call today are David Phipps, Chief Executive Officer, Amanda Ferrio, Chief Financial Officer, and Birute Norkute, Vice President of Healthcare Operations. I'll now turn the meeting over to David Phipps for his opening remarks.

Good morning and welcome to NextPlat's year-end 2025 results conference call. Thank you for joining us. On today's call, we will discuss our annual results and highlight the significant turnaround progress we have made in improving our operations during the latter half of 2025. Most importantly, we want to share with you what we see in early 2026, specifically as it relates to our growth and profitability goals. Let me start by addressing the reverse split we announced last week. While the reverse split is not something we wanted to do, it was required to maintain our listing on Nasdaq. While our board and management team understand investor negativity around reverse splits, as collectively the largest shareholders, we don't believe NextPlat is representative of the kinds of companies that need to do reverse splits.

Those companies are typically poorly capitalized with weak businesses, significant sometimes toxic debt, and very diluted share counts. NextPlat, on the other hand, is well capitalized with nearly $14 million in cash, no debt and high insider ownership. As we have previously communicated and will discuss at length today, we now have a fundamentally improving business with growing margins and an expanding new business pipeline. Furthermore, we are now expanding our healthcare business from the single state of Florida to nationwide with the ability to support customers and patients in all 50 states. In looking at the business, as previously discussed in our various shareholder updates and press releases, we are starting to see the positive results of our business turnaround efforts.

These are particularly clear when looking at the dramatic decreases in our cost structure, a direct result of our efforts to streamline the business and reduce overhead, all of which are contributing to over $2 million in annualized cost reductions. Something Amanda L. Ferrio, our Chief Financial Officer, will discuss in more detail shortly. We are especially proud of our progress on not only cutting costs, but our successful efforts to improve the profitability of our healthcare business, which represented about 73% of our revenue in 2025. Our efforts here were focused on new business development, targeting higher margin 340B covered entities and long-term care facilities, securing medication fulfillment contracts, re-engagement with former clients, and improving our customer service. These initiatives are now delivering the growth and early signs of margin improvement in the first quarter of 2026. Details of which Birute Norkute will comment on shortly.

I will now briefly recap the developments in the fourth quarter, then Birute will discuss progress within our healthcare segment, and Amanda will review our financial results. Following their presentations, I will provide some concluding high-level remarks on our shorter-term objectives and the positive developments you should expect to see from the company in 2026. After that, we will then conclude the conference call by responding to questions that were submitted by our shareholders. Let me begin by stating that the end of 2025 marked a significant turning point for NextPlat as we largely completed much of the work we outlined in our refocusing and business improvement plans. As we have shared with you, these plans were designed to improve operations, reduce costs, and grow the business with the goal of driving profitability in 2026.

I'm pleased to say that as early first quarter 2026 data indicates we have been successful across a number of key operational and financial metrics, most notably early margin improvement, which is expected to ultimately support meaningful reductions in operating losses by the latter half of 2026. While we cannot provide too much detail today, we intend to provide our investors and the market with an update on our first quarter 2026 performance shortly after completing our financial close. I'd like to now review our business and provide some additional insights which I believe will be helpful for investors in measuring our progress. In our Healthcare segment, we are pleased to report the following improvements in operations during the fourth quarter.

To start, we prioritize our focus on supporting medical clinics participating in the U.S. government's 340B Drug Pricing Program, which we refer to these clinics as covered entities. We support these covered entities with prescription management and fulfillment services, helping them meet their contracted patient adherence requirements. Our ability to drive adherence is a key differentiator for us that sets us apart from our competitors and something that helps us drive brand awareness and generate leads with other participating covered entities. These efforts resulted in a strong 94% increase in 340B contract revenue for the fourth quarter of 2025 versus the third quarter of 2025. Secondly, the contributions from recently added medication fulfillment contracts have surpassed expectations as we fulfill 7,000+ prescriptions per month to their two facilities in Florida.

The service fees we recognize from these fulfillments are driving significant bottom line profit improvements each month. Finally, because of our newly created nationwide fulfillment partnership with HealthWarehouse, we intend to quickly leverage our relationships with current and potential customers, offering our services and support their operations in all 50 states. This is a milestone for our healthcare operation, setting the stage for us to expand our business and compete on a national level by leveraging our solid foundation in Florida. It should be noted that in 2025, our healthcare segment generated nearly $40 million in sales, or approximately 73% of our consolidated revenue, all from the single state of Florida. As you can imagine, our expansion beyond Florida into 49 additional states through our partnership with HealthWarehouse provides us with a large new pathway to drive growth in our healthcare business.

In our e-commerce segment, here are our most recent highlights. We continue to set new annual sales records driven by strong growth in Internet of Things hardware and recurring high margin airtime revenue, which also reached all-time highs. This performance is highlighted by the annual sales of over 5,000 Iridium and Globalstar devices, along with more than 12,000 satellite-enabled trackers and messengers, both setting new annual sales records. We continue to expand our global footprint and product portfolio, highlighted by the selection of GTC as the exclusive distributor for personal messaging and tracking products by a leading global satellite network operator to countries in the Nordic region. A new IoT and 5G product distribution agreement with Telit Cinterion. Additionally, we also received a significant contract supporting a NATO customer, adding to our growing involvement with U.K. government and defense customers.

Finally, we just launched e-commerce sales in five countries in South America through Mercado Libre, the largest e-commerce platform in Latin America, which we expect to drive continued growth in this segment. At this point, I would like to now turn the call over to Birute for her update.

Thank you, David. As David noted in his opening remarks, our fourth quarter financial results reflect continued positive trends in our healthcare segment, specifically in our higher margin, 340B and new contracted medication fulfillment services, which is helping offset continued softness in retail prescription volumes. This is one of the reasons why we have chosen to focus our efforts on the higher margin contracted services instead of traditional retail business in the near term. While this may impact top line revenue and prescription volumes in the first half of 2026, we believe the improved unit economics make this a prudent strategy. Importantly, we believe the trends we are seeing in 340B and fulfillment services are sustainable and expected to continue building through 2026.

We are already seeing early positive improvements on margins in retail and long-term care reimbursements, in part from the Medicare Maximum Fair Price program, which we expect to further support margin growth as the year progresses. Let me highlight some of the key areas where we made notable progress. As previously discussed, we have dramatically streamlined our operations and greatly enhanced our customer service while reducing our employee headcount by more than 25%. We continue to see a strong and sustainable turnaround in our 340B business, supported by the targeted service improvements and customer engagement efforts we implemented in late 2025. We are proud of the fact that former clients have returned and continue bringing more of their business back to us. New covered entities have joined us and the valuable customer prescription volumes are once again growing.

Three new 340B entities started in the fourth quarter of 2025. Two more became active on January 1st, 2026, and we have several more lined up to start in the coming quarters of 2026. The recruitment of dedicated long-term care sales personnel combined with the refreshed and more targeted sales strategy is expected to re-accelerate growth in our long-term care segment. We are focusing on higher value facility partnerships, improving conversion rates, and strengthening the referral pipelines, which should translate into increased census and revenue contribution in the second half of the year. We implemented purchasing and inventory optimization strategies that generated meaningful one-time savings while establishing tighter controls on inventory levels going forward.

These improvements reduced excess stock, improved turns, and are expected to deliver a sustained positive impact on cash flow management. We continue to nurture our partnership with an integrated care model organization that combines telehealth, clinical management, and 340B infrastructure, enabling us to reach high needs populations, including patients requiring MOUD, HIV, and hepatitis C care and unlocking new growth opportunities. Lastly, we are very encouraged that our partnership with HealthWarehouse is now effective, which expands our operational capabilities, contract opportunities, and market access. This positions us to drive meaningful growth and significantly scale our fulfillment capabilities going forward. That concludes my remarks. Back to you, David.

Thank you, Birute. At this point, I will turn the call over to Amanda to discuss our financial results for the year ended December 31, 2025.

Thank you, David. Good morning, everyone. As David mentioned, the fourth quarter of 2025 marked an important inflection point for the company as the benefits of our cost optimization and strategic refocusing initiatives began to materialize in our financial performance. For the year ended December 31, 2025, we reported total revenue of approximately $54 million compared to approximately $66 million in 2024, representing an 18% decline. This decrease was primarily driven by lower contributions from our healthcare operations segment, reflecting reduced 340B and retail prescription volumes earlier in the year. However, it's important to emphasize that while revenue declined year-over-year, the underlying fundamentals of the business have strengthened meaningfully, and we are seeing encouraging signs of stabilization and improvement as we exit the year.

Within our healthcare operations, we made significant progress in repositioning the business toward more sustainable and higher margin revenue streams. Full year healthcare operations revenue was approximately $40 million compared to approximately $52 million in 2024. In the fourth quarter, revenues of approximately $9 million were relatively stable when sequentially compared to $10 million in the third quarter, reflecting a transition period. Encouragingly, in Q4, we saw a 94% increase in 340B contract revenue and initial contributions from higher margin medication fulfillment services and early signs of retail prescription stabilization. This aligns with our broader strategy outlined in our Form 10-K to shift towards data-driven, contract-based and recurring healthcare services, which we believe will improve both margins and predictability over time.

As we enter 2026, we expect continued growth in 340B contract revenue and fulfillment services, gradual improvement in prescription volumes, and a favorable impact on margin profile over time. Our e-commerce operations continue to deliver steady growth with revenue increasing to approximately $15 million, up 6% year-over-year. This growth was driven by strong demand for satellite connectivity and Internet of Things products, as well as expansion of recurring airtime and subscription-based services. We expect this segment to remain a stable growth engine supported by global e-commerce expansion, marketplace diversification, and continued demand for mission-critical connectivity solutions.

As a result of these shifts in our revenue mix, while consolidated gross margin for the full year was approximately 20% compared to approximately 26% in 2024, the more important trend is sequential improvement, including progress late in the fourth quarter, driven by higher margin healthcare services and improved unit economics driven by the focus on revenue quality. While first quarter 2026 gross margins reflect the early stages of our transition, we expect margins to improve progressively throughout the year, with a more meaningful step-up beginning in the second quarter as higher margin revenue streams continue to scale. A major achievement in 2025 was the reset of our operating cost structure. Total operating expenses decreased by approximately 25% to $20 million, compared to approximately $26 million in the prior year, excluding a non-recurring impairment charge in the prior year of nearly $14 million.

Salaries and wages decreased by approximately 20%, and professional fees decreased by approximately 49%. These reductions reflect a leaner and more efficient operating structure. We expect continued expense discipline and further reductions in operating losses as we move through 2026. We ended the year with a solid balance sheet, including nearly $14 million in cash, no meaningful debt, and approximately $15 million in working capital. Cash usage declined significantly compared to the third quarter, and we expect relatively stable cash levels in the first half of 2026. This provides us with flexibility to support operations, invest selectively in growth, and evaluate strategic opportunities. In summary, we have stabilized the business after a challenging first half, significantly reduced our cost structure, and maintained a strong balance sheet and liquidity.

We are now beginning to see the benefits of our shift toward higher margin recurring revenue streams and remain focused on driving profitable growth and continued improvement in bottom line performance. I encourage you to review our financial statements and disclosures in our annual report on Form 10-K for additional details. That concludes my remarks. Back to you, David.

Thank you, Amanda. Before we turn to investor questions, I would like to quickly recap the results of our turnaround efforts while providing some insights into where we are going and what to expect in 2026. With the completion of the fourth quarter, our team believes we have made significant progress executing our turnaround plans for NextPlat, putting us on a clear path toward improved profitability in 2026 and beyond. Despite that, the evidence of our progress is somewhat obscured by one-time expenses included in our annual results. The positive impact of our largely completed company-wide effort to streamline the business and invest in its growth will become increasingly evident as we move through 2026. As such, you should expect to see an update here when we pre-announce first quarter 2026 guidance shortly after our financial closing.

That said, we have implemented $2 million+ in annualized overhead, staff, and other operational cost reductions. Changes to product and service offerings in healthcare are now driving meaningful improvements in financial and operational metrics, highlighted by expectations of continued gross margin improvement in the first quarter of 2026, with more meaningful expansion expected as we move through 2026, improved cash flows, reduction in operational losses, and substantially reduced cash burn expected throughout 2026. We aren't just focused on cutting costs. We are focused on growing the business. Through our new relationship with HealthWarehouse, we are now able to expand our healthcare offerings nationally beyond Florida. We are now able to support multi-state contracted customers and have already begun discussions with our clients.

With the added resources of HealthWarehouse, we can now support the creation of new revenue streams, including e-commerce and online healthcare offerings for providers, patients, and consumers, similar to e-commerce offerings in communications. We have made great strides in rebuilding NextPlat, and we believe we are well positioned for continued improvement. In 2026, our board and management team are committed to delivering bottom-line results for our shareholders and to reward all those who have supported the company. At this point, we can now conduct the Q&A portion of today's call. We have again asked investors and shareholders to submit their questions in advance, and we would like to thank all of you who did. Question number one. Do you believe that the reverse split was necessary? Couldn't the company buy back stock in an effort to achieve the $1 minimum bid requirement?

Firstly, I should say that the buyback program expired in December, and we have been in a blackout period since then, so repurchasing shares haven't been an option for us. It should be noted that the buyback program was designed to support the stock price, not drive it up. In fact, there are significant restrictions and guidelines imposed by the SEC and Nasdaq, which limit the ability of a company to influence its share price through a buyback program. Secondly, as we indicated last quarter, we are being prudent with our cash as we see opportunities to invest in the growth of the business. That being said, it's the view of our board of directors and management that maintaining our listing on Nasdaq is a critical part of our growth and expansion plans.

As such, given the current market environment, the reverse split was the most viable option for the company at this time. Given the improving fundamentals and unrealized potential of the business, I want to say that our ongoing investment community engagement efforts with both current shareholders and prospective shareholders and analysts remains unchanged. We remain committed to additional proactive outreach and to employing additional investor relations resources throughout 2026. Question number two. What are the current plans for the buyback? Reinstating the program is something we are considering and will certainly announce any details on this when appropriate. Question number three. Can you comment on the status of the ongoing lawsuits? Does the accrual mean a settlement is pending? We continue to work with counsel to resolve the final remaining legal matter as quickly as possible while protecting the long-term interest of our shareholders.

Clearly, there are two paths here. The first being proceeding to trial and the second being reaching a settlement. The ultimate path taken will depend on the opinion of counsel and that of our insurance company, which is why we took a non-cash contingency charge for potential future litigation costs should it be necessary. That was the final question that we received from investors. Thank you all again for submitting them. Please remember that you can submit your questions at our investor relations email, which is [email protected], or with our IR contact listed on our press releases, Michael Glickman at [email protected]. That concludes our earnings conference call. We look forward to continuing to share with you our progress in the weeks and months ahead. Have a nice rest of your day. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the NextPlat Corp 2025 Third Quarter Earnings Conference Call. Certain statements made during this conference call constitute forward-looking statements. These statements include the capabilities and success of the company's business and any of its products, services, or solutions. The words believe, forecast, project, intend, expect, plan, should, would, similar expressions, and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties, and other factors, any of which could cause the company to not achieve some or all of its goals, or the company's previously reported actual results. Performance, financial or operating, including those expressed or implied by such forward-looking statements. More detailed information about the company and the risk factor forward-looking statements that may affect the realization is set forth in the company's filings with the Securities and Exchange Commission, the SEC. Copies of which may be obtained from the SEC's website at www.sec.gov. The company assumes no and hereby disclaims any obligation to update the forward-looking statements made during this call. Joining us on the call today are David Phipps, Chief Executive Officer and President, Amanda Ferriero, Chief Financial Officer, and Barut Norkut, Vice President of Healthcare Operations. I'll now turn the meeting over to David Phipps for his opening remarks. Good morning, and welcome to NextPlat Corp's Third Quarter 2025 Earnings Call. Thank you for joining us.

Objective today is to highlight many of the changes that we've undertaken in the third quarter, many of which will be more fully realized on a sequential basis starting in 2025 and throughout fiscal year 2026. Although our results of operations for the third quarter 2025 are not what we would have liked, we believe that our efforts resulted in favorable operating expenses and cash outflows. An improvement in our pharmacy and e-commerce revenue and profitability. Operationally, improvements were evident late in the third quarter and have continued into the fourth quarter. A positive trend we expect to continue. After I recap the developments in the third quarter, Barut Norkut will discuss activities in our Healthcare segment. Amanda Ferriero, our CFO, will discuss our financial results. Then I will provide some concluding high-level remarks on our long-term objectives and developments, which we believe will positively drive the business forward. After that, we will then conclude the conference call by responding to questions that were submitted by our shareholders. Before I start, I would like to comment on our latest leadership updates. First, I wish to thank Cecile Munnik for her efforts as CFO leading our financial team and for her support during our transition to our new CFO, Amanda Ferriero. I also wish to welcome Barut Norkut as Vice President of Healthcare Operations who is joining us on this call today. Now, in terms of the business as we discussed with you during our last earnings conference call, and in our recent CEO shareholder updates. Our team has been busy implementing a series of actions designed to improve operations, reduce costs, and grow the business. As I stated earlier, although overall results for the third quarter do not reflect the full impact of our efforts, we did see meaningful improvements to operating metrics in September and we believe they will be more fully clear in our results for the fourth quarter and into next year. For those of you that are new investors in our company, I'd like to review NextPlat Corp's business model. This is built around three core segments. Healthcare services through our PharmCo Rx pharmacies, communications products and services through our global Telesat, Orbis and Satcom, and Outfit of Satellite subsidiaries, and our e-commerce development program supporting the sales of US-produced products into the Chinese market. Provided an extensive review of these segments in our recent shareholder letter released on October 8. You can find this on our website. I'd like to now provide a further update on our progress since that date. Most of which is reported in more detail in our quarterly interim financial report on Form 10-Q, which we have just released. Our Healthcare segment, we're continuing to see improvements resulting from our cost reduction efforts, and additional investments in business development. To illustrate these improvements, Amanda will provide the third quarter to second quarter review of the financial results. Overall, we're realizing significant revenue and profitability improvements from our business development initiatives started in the second quarter. This is highlighted by new contracts with a state prime contract holder and expanded business within the 340B space. Our leadership team has been successful in reengaging with a number of important clients who have, for various reasons, reduced business with us over the last few quarters. These efforts have already contributed to improved prescription volumes late in the third quarter, and into the early part of the fourth quarter. Barut Norkut will provide more insight into our health operations in a moment. In our e-commerce and communications segment, these are the most recent highlights. During the quarter, our e-commerce segment continued to see robust sales for satellite-based connectivity and IoT products, through our various e-commerce sites, as well as high-margin recurring revenue, which continues to run at record levels. We are continuing to expand our portfolio of cutting-edge connectivity products, and we grow our customer, consumer, and enterprise base with new and existing relationships.

Relationships.

Recent highlights here are the selection of GTC as the exclusive distributor for personal messaging and tracking products by a leading global satellite network operator for countries in the Nordic region. And the initial sales of Starlink products in the US through our Outfit for Satellite Unit. Sales of OPKO Healthcare branded human health and wellness products in China continue to show good sell-through despite lingering challenges of limited inventory levels. We are currently experiencing record sales volumes of OpCo products during the current 11/11 event, the world's largest sales event. In September, we also launched our Florida Sunshine range of nutraceutical products in the UK and the EU, and we began processing orders via Amazon Shopify e-commerce storefronts. Launching a new brand in new markets always takes time. And therefore initial sales are very modest as expected. But we are excited to be preparing the launch of an AI-driven marketing campaign for Florida Sunshine in partnership with an experienced healthcare brand marketing firm and to advancing our storefront on Alibaba's Tmall store in China. Now we've been approved to sell in the country. Now I'd like to turn the call over to Barut Norkut for her update. Barut Norkut, over to you.

Thank you, David.

As David noted in his opening remarks, our third quarter financial results reflect continued weakness across several areas. That said, we began to see a meaningful turnaround during the quarter, most notably in our 340B line of business. This momentum has continued through October, and we expect it to carry into the fourth quarter. To date, we have reduced our employee headcount by 50 since the start of the year, resulting in approximately $200,000 in monthly payroll savings inclusive of new hires added during the year. We expect payroll expenses to continue to decrease throughout the remainder of the year. Our 340B business has delivered a strong and sustainable rebound, driven by targeted service improvements and stronger customer engagement. Former clients have returned, new covered entities have joined us, and together, these factors have produced meaningful gains in both volume and revenue. In October, we dispensed more than 1,600 340B prescriptions, a significant increase, resulting in over 140% rise in monthly 340B contract revenue when compared to our lowest month earlier in the year. Our retail prescription business is also gaining momentum, with volumes up 27% from the low experienced earlier in 2025, supported by the new government pharmacy service contract and more consistent operational performance. These improvements have strengthened confidence among both existing and new clients as delivery times have shortened and customer response rates have improved significantly. Collectively, these advances have enhanced efficiency, customer satisfaction, and overall reliability, positioning us well for continued growth through the fourth quarter. Looking ahead, our focus will be on optimizing inventory levels and purchasing intervals to improve working capital efficiency. We also implemented key personnel changes in logistics to enhance performance and reduce delivery costs. These actions are expected to generate more than $1,500,000 in one-time cash savings through the return of excess inventory to our supply. While there is still work ahead, we are encouraged by the progress achieved and the solid foundation we're building for our future growth. The initiatives now underway are creating opportunities to further enhance efficiency, expand our capabilities, and strengthen long-term financial and operational performance. That concludes my remarks. Back to you, David.

Thank you, Barut.

At this point, I will turn the call over to Amanda to discuss our financial results for the three and nine months ended 09/30/2025. Over to you, Amanda.

Thank you, David. Good morning, everyone. It's a privilege to join you today for my first earnings call as Chief Financial Officer. I will now walk through our consolidated financial results. For the third quarter ended 09/30/2025, we reported total revenue of $13,800,000 compared to $15,400,000 in the prior year quarter, representing an 11% decrease. The decline was primarily driven by lower contribution from our Healthcare Operations segment, which experienced a decline of approximately $1,500,000 while our e-commerce segment experienced a modest decrease of about $100,000. Within our Healthcare Operations segment, pharmacy prescription revenues increased by approximately $400,000 or 5% to $9,500,000 for 2025 when compared to the prior year period. This improvement was driven by higher reimbursement rates per prescription which offset the decline in total prescriptions filled, about 96,000 this quarter versus 128,000 a year ago. However, comparing 2025 to 2025, prescription volume increased by roughly 5,000 prescriptions resulting in a revenue increase of $1,300,000 or 16%. Our 340B contract revenue for 2025 decreased to $600,000 from $2,500,000 in the prior year quarter. This was due to transitions of certain covered entities to other pharmacy partners and their exit from the program or in-house sourcing. When comparing Q3 to 2025, 340B contract revenue declined by approximately $400,000. In e-commerce, revenue totaled $3,700,000 compared to $3,800,000 in the prior year quarter, a modest 4% decline. The decrease was mainly related to lower hardware sales which were partially offset by favorable foreign currency impact. Gross profit margin for the quarter was $2,700,000 compared to $3,600,000 in the prior year quarter. That represents a gross margin of 19.9%, down from 23.2%. The decline reflects softer performance in both segments, primarily due to reduced 340B contract revenue in Healthcare Operations and increased airtime costs in our e-commerce business following the expiration of a legacy service provider contract at the end of 2024. As we described earlier in this call, operational changes instituted during the third quarter have led to efficiencies and improvements that resulted in significant cost reductions. Total operating expenses decreased by nearly 40% to $4,700,000 compared to approximately $7,800,000 in 2024, which is excluding a non-recurring impairment charge of $3,700,000 in the prior year. Salaries and wages declined by approximately $800,000 due to lower stock-based compensation, reduced executive compensation, and a leaner workforce. Professional fees also decreased by about $1,800,000 reflecting lower legal and consulting costs. During 2025, we began repurchasing our common shares under the authorized share repurchase program. A total of 130,549 shares were repurchased and are being held as treasury stock. We ended the quarter with $13,900,000 in cash and working capital of $18,900,000. While we continue to experience net cash outflow during the quarter, we expect to significantly reduce our cash burn going forward as a result of the operational improvements mentioned earlier. In summary, while the quarter reflected some top-line pressure, our results demonstrate continued progress in streamlining our cost structure, improving efficiency, and preserving liquidity. As we look ahead to the fourth quarter, our focus remains on disciplined expense management. As David and Barut mentioned, we're advancing several initiatives aimed at achieving lasting cost savings. We all remain fully committed to improving operational efficiency and strengthening our financial foundation. I encourage you to review our financial statement as contained in our quarterly report on Form 10-Q filed with the Securities and Exchange Commission. That concludes my remarks on the financial results of the business. Back to you, David. Thanks, Amanda.

At this point, I would like to provide some closing thoughts. Our progress against our refocusing and cost-cutting efforts had only a slight impact on the third quarter, which still largely reflects the ongoing state of the business without the benefits of the many positive developments discussed today. As such, we would review Q3 results as the low point in our business and believe that going forward, our efforts will begin to make more meaningful sequential impact across multiple operational metrics starting in the fourth quarter and continuing through next year as we advance towards our goal of achieving operational breakeven in 2026. In the shorter term, our efforts include continued emphasis on growth of profitable business lines through commitment of capital to marketing and sales efforts. We continue to add new contracts in both our communication and healthcare segments that will come online during Q4 2025. Although we see continued progress in our 340B and long-term care business, development efforts with new contracts coming online. We see opportunities for continued improvement here. Finally, we have further committed to invest in critical areas of the business. Some specifics here include adding to our sales team during the fourth quarter, enhancing our business development efforts, and as previously mentioned, recruiting the long-term care sales team so that we can capitalize on the opportunities we see in this part of the market. That concludes our formal remarks. We can now conduct the Q&A portion of today's call. We have again asked investors and shareholders to submit their questions in advance. And we would like to thank all of you who did. Question number one. What are the current plans for the buyback? Do you intend to increase the level of activity and pace? At this point in time, the program is still available. And as such, we continue to monitor the market. Please note, as we have said, we intend to be prudent in terms of deploying our available cash for the repurchase of shares. As we do have other critical investments we intend to make as described earlier today. As is our policy, we will provide an update on this program in our fourth quarter report. Question number two. How does the additional 180-day extension from Nasdaq change your plans to increase the stock price to regain compliance? We are pleased to get this extension, but in the very short term, it doesn't really change plans. We remain focused on improving our financial results, which will be critical for investors' confidence in our company. We do believe, however, starting early in the New Year, that we will have opportunities to be more proactive in engaging with new investors and we're looking at a number of events and activities. Question number three. Have your views on China changed given the lingering uncertainties? As we have said previously, tariff-related challenges are something we are dealing with. However, for non-US made products like OpCo, there are still opportunities. When we get inventory into China, it sells quickly. So even when you factor in high marketing costs, we're still able to generate very attractive margins. In terms of expanding our efforts with the optical animal products, the slow approval process is frustrating. But we continue to see strong demand overall for OpCo products. And we intend to still pursue these products as soon as we get approval. After Florida Sunshine, our Tmall store has now been approved. And we'll be shipping our first batch of products as soon as we clear some import certification requirements. Question number four. Can you comment on the status of the ongoing lawsuits? Cannot comment specifically on the ongoing litigation other than to say that as of today, we have resolved two of the matters and are working with counsel to resolve the final matter as quickly as possible while protecting the long-term interest of our shareholders. That was the final question that we received from investors. Thank you all again for submitting. Please remember that you can submit your questions on our Investor Relations email which is [email protected] or with our IR contact listed on our press releases. Michael Gretman, at [email protected]. That concludes our earnings conference call. We look forward to continuing to share with you our progress in the weeks and months ahead. Have a nice rest of your day. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.