Shares of Better Choice Company Inc. BTTR have declined 9.4% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 index’s 1.9% decline over the same time frame. Over the past month, the stock has gained 12.4% against the S&P 500’s 4.3% decrease, highlighting a degree of volatility and divergence from broader market trends.

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For the fourth quarter of 2024, Better Choice incurred a net loss per share of 50 cents, which improved 97% year over year.

The company reported a 26% year-over-year increase in revenues to $7.2 million. The quarter also saw a significant narrowing of losses, with net loss improving 90% to $1.6 million. Adjusted EBITDA came in at a negative figure of $0.7 million, which improved year over year, reflecting the company’s cost discipline and operating efficiencies. Gross margin expanded meaningfully by 2,705 basis points to 36%, driven by stronger volumes and improved terms with manufacturing partners.

Key Business Metrics Show Operational Gains

The company emphasized a shift toward higher-margin digital sales channels, noting 32% year-over-year growth in Amazon and Chewy sales in the fourth quarter. Gross margin improved for the fourth consecutive quarter, supported by operational leverage and better cost management. Inventory was reduced by over 40% year-over-year while maintaining service levels above 95%. Additionally, a $6.2 million gain on the extinguishment of debt and accounts payable improved the balance sheet, boosting working capital to $7.9 million from $2.5 million in the prior year.

SG&A expenses were reduced by 22% in 2024 as the company streamlined operations and exited its direct-to-consumer business. These efforts helped drive a 10% increase in gross profit dollars despite the topline revenue decline. Better Choice also lowered its direct cost per pound by 4%, achieved through international volume scaling and favorable supply terms.

Management Commentary Highlights Strategic Progress

CEO Kent Cunningham described 2024 as a transformative year in Better Choice’s turnaround strategy. He pointed to robust growth in key e-commerce platforms, successful Black Friday promotions, and strong traction in the Asia-Pacific region, including the launch of Halo on Chewy Canada. CFO Nina Martinez echoed these sentiments, citing sustained gross margin expansion, disciplined marketing investment, and an asset-light, outsourced manufacturing model as key drivers of profitability progress.

Drivers Behind the Headline Numbers

The substantial improvement in financial performance was attributed to a combination of strategic exits from unprofitable sales channels, focus on high-return e-commerce partners, cost controls and increased scale in international markets. The gross margin gains were underpinned by disciplined trade spend and an optimized product portfolio, especially in plant-based offerings. The extinguishment of debt and supplier settlements also played a key role in reducing losses and strengthening the balance sheet.

Full-Year Update

For the full year 2024, Better Choice incurred a net loss of $0.2 million, narrower than the $22.8 million loss in 2023. Loss per share narrowed significantly to 10 cents from $32.29, while adjusted EBITDA came in at a negative figure of $1.9 million. 

Revenues for the year declined 9% to $35 million, a result of strategic exits from non-core, unprofitable channels. However, revenue from key digital platforms rose 8%, and international sales grew 18% year over year.

Other Developments

Subsequent to year-end, Better Choice entered into a definitive agreement to sell its Halo Asia business for $6.5 million in cash at closing, plus a 3% royalty on future sales over five years, guaranteed at a minimum of $1.7 million. The company also agreed in principle to a 5.5% royalty on sales of the Halo Elevate brand in Asia. Additionally, the board approved a plan to distribute up to 55% of annual royalties from Halo to shareholders of record as of Dec. 31 each year.

Better Choice also expects to close its acquisition of SRx Health Solutions in April. The deal, approved by shareholders of both companies, is expected to create a leading global health and wellness platform with synergies and new growth avenues for both pet and human health products.

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This article originally published on Zacks Investment Research (zacks.com).

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