FitLife Brands reported third‑quarter revenue of $23.5 million, a 47% year‑over‑year increase that still fell short of the consensus estimate of $23.75 million by $0.25 million. Basic earnings per share were $0.10, missing the analyst expectation of $0.25 by $0.15, while net income dropped to $0.9 million from $2.1 million a year earlier, largely due to a $6.5 million transaction expense and higher tax charges.
The revenue lift was driven almost entirely by the Irwin acquisition, which contributed $6.8 million and pushed wholesale sales up 156% to $13.2 million. Online revenue, however, slipped 5% to $10.3 million. Gross margin contracted to 37.2% from 43.8% the previous year, a decline largely attributable to acquisition‑related costs and rising ingredient expenses. When the inventory step‑up amortization is excluded, the margin is 38.9%, still lower than last year’s 43.8%.
Segment results reveal a mixed picture. Legacy FitLife revenue fell 5% YoY, but excluding the MRC sub‑segment, the legacy business grew 8% with online sales up 14% and wholesale up 3%. The MRC segment declined 11% to $6.7 million. MusclePharm, acquired in 2023, surged 55% to $2.0 million, driven by a 112% jump in wholesale sales that more than offset a 3% dip in online revenue. Gross margins for MusclePharm fell to 30.1% from 40.0% due to higher whey protein costs.
Management emphasized the ongoing integration of Irwin and the expansion of MusclePharm’s distribution network. The company highlighted the short‑term margin squeeze caused by acquisition costs and protein‑price inflation, but noted that the wholesale growth in MusclePharm should provide long‑term upside as the brand gains market share. The $6.5 million transaction expense and higher ingredient costs were cited as the primary reasons for the net income decline and margin compression.
The earnings miss on both revenue and EPS signals that, while the acquisition strategy is delivering top‑line growth, profitability is under pressure from one‑time charges and cost inflation. The shift toward wholesale revenue—now 56% of total sales—may help offset margin compression in the short term but could limit long‑term margin expansion if online sales continue to decline. No forward guidance was disclosed, so investors will need to monitor subsequent earnings for indications of how the company plans to manage these headwinds.
Overall, FitLife Brands’ Q3 results demonstrate that acquisitions are driving revenue growth, but the company faces significant margin pressure and a decline in net income. Management’s focus on integration, cost control, and expanding MusclePharm’s distribution network suggests a strategy aimed at turning short‑term profitability challenges into long‑term value.
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