HEALTHY CHOICE WELLNESS CORP.

Previous wording

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements. The terms “we,” “us,” “our,” and the “Company” refer to Healthy Choice Wellness Corp. and its wholly-owned subsidiaries, Healthy Choice Markets, Inc., Healthy Choice Markets 2, LLC (“Paradise Health and Nutrition”), Healthy Choice Markets 3, LLC (“Mother Earth’s Storehouse”), Healthy Choices Markets 3 Real Estate LLC, Healthy Choice Markets IV, LLC (“Green’s Natural Foods”), Healthy Choice Markets V, LLC (“Ellwood Thompson’s), Healthy Choice Markets VI, LLC (GreenAcres Market), Healthy Choice Wellness, LLC, The Vitamin Store, LLC, and Healthy U Wholesale, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Current wording

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements. The terms “we,” “us,” “our,” and the “Company” refer to Healthy Choice Wellness Corp. and its wholly-owned subsidiaries, Healthy Choice Markets, Inc. (“Ada’s Natural Market”), Healthy Choice Markets 2, LLC (“Paradise Health and Nutrition”), Healthy Choice Markets 3, LLC (“Mother Earth’s Storehouse”), Healthy Choice Markets IV, LLC (“Green’s Natural Foods”), Healthy Choice Markets V, LLC (“Ellwood Thompson’s), Healthy Choice Markets VI, LLC (GreenAcres Market), Healthy Choice Wellness, LLC, The Vitamin Store, LLC, and Healthy U Wholesale, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Previous wording

The Company currently and historically has reported net losses and has reported cash inflows from operations this year. As of September 30, 2025, the Company had cash and cash equivalents of approximately $3.0 million and negative working capital of $0.3 million.

Current wording

The Company currently and historically has reported net losses and has reported cash outflows from operations this quarter. As of March 31, 2026, the Company had cash and cash equivalents of approximately $2.3 million and negative working capital of $4.1 million.

Previous wording

Total other expenses, net of $0.6 million for the three months ended September 30, 2025 consists of net interest expense of approximately $0.2 million, other miscellaneous income of approximately $2,000, and $0.4 million loss on debt extinguishment. Total other expense, net of $2.3 million for the three months ended September 30, 2024 consists of $1.9 million loss on warrant settlement, and net interest expense of $0.4 million.

Current wording

Total other expenses, net for the three months ended March 31, 2026 were $2.1 million, consisting of net interest expense of approximately $0.2 million, loss on debt extinguishment of approximately $0.2 million, equity method loss of approximately $0.1 million, and impairment loss on equity method investment of $1.6 million. Total other (expenses) income, net of $0.3 million for the three months ended March 31, 2025 consists of net interest expense of $0.3 million, other miscellaneous income of approximately $2,000, offset by $8,000 loss on debt extinguishment.

Previous wording

As of September 30, 2025, the Company has operating lease obligations totaling $11.5 million. The weighted-average remaining lease term is 4 years, with a weighted-average discount rate of 5.27%. Rent expense for the three months ended September 30, 2025 was $1.0 million, compared to $1.2 million for the same period in 2024. Rent expense for the nine months ended September 30, 2025 was $2.9 million, compared to $3.0 million for the same period in 2024. The overall decrease is primarily attributable to a significant reduction in variable lease costs, which are primarily based on property taxes and are expensed as incurred. Looking forward, we expect overall rent expense to be influenced by two key factors: the expiration of certain leases and potential new commitments at market rates, and fluctuations in variable costs, primarily property taxes, which are inherently uncertain but have trended lower in the current year. Rising interest rates and inflation could increase the cost of future lease obligations. While the weighted-average discount rate increased marginally to 5.27% from 5.19% in 2024, a sustained rate hike environment may elevate borrowing costs for future lease liabilities.

Current wording

As of March 31, 2026, the Company has operating lease obligations totaling $10.0 million, with a weighted-average remaining term of 3 years and a weighted-average discount rate of 5.52%. Rent expense for the three months ended March 31, 2026 was approximately $1.0 million, consistent with the same period in 2025. Future rent expense may be affected by lease expirations and new commitments at market rates, as well as fluctuations in property taxes, which have trended lower in the current year. Rising interest rates could increase the cost of future lease obligations, as evidenced by the increase in the weighted-average discount rate to 5.52% from 5.30% in the prior year.

Previous wording

Our net cash provided by operating activities of approximately $1.9 million for the nine months ended September 30, 2025 resulted from a net loss of $2.3 million, offset by a non-cash adjustment of $6.8 million and a net cash usage of $2.6 million from changes in operating assets and liabilities. Our net cash used in operating activities of approximately $4.0 million for the nine months ended September 30, 2024 resulted from resulted from a net loss of $4.0 million, offset by a non-cash adjustment of $7.5 million and a net cash usage of $7.5 million from changes in operating assets and liabilities.

Current wording

Our net cash used in operating activities of approximately $0.2 million for the three months ended March 31, 2026 resulted from a net loss of $3.7 million and a net cash usage of $0.4 million from changes in operating assets and liabilities, offset by a non-cash adjustment of $3.9 million. Our net cash provided by operating activities of approximately $1.1 million for the three months ended March 31, 2025 resulted from a net loss of $0.7 million, offset by a non-cash adjustment of $2.0 million and a net cash usage of $0.2 million from changes in operating assets and liabilities.

Previous wording

The net cash used in investing activities of $0.2 million for the nine months ended September 30, 2025 was due to purchases of property and equipment. The net cash used in investing activities of $4.9 million for the nine months ended September 30, 2024 consists of $5.5 million payment for GreenAcres Market acquisition, $0.1 million purchases of property and equipment, offset by $0.7 million proceeds from sale of Saugerties building.

Current wording

The net cash used in investing activities of $0.2 million for the three months ended March 31, 2026 consists of $0.1 million cash advance to related party and $0.1 million purchases of property and equipment. The net cash used in investing activities of $1.1 million for the three months ended March 31, 2025 consists of $1.0 million payment to related party and $0.1 million purchases of property and equipment.

Previous wording

The Company reported a net loss of $2.3 million for the nine months ended September 30, 2025. The Company also had negative working capital of $0.3 million. The Company expects to continue incurring losses for the foreseeable future.

Current wording

The Company reported a net loss of $3.7 million for the three months ended March 31, 2026. The Company also had negative working capital of $4.1 million. The Company expects to continue incurring losses for the foreseeable future.

Previous wording

Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements. These estimates include useful lives and impairment of long-lived assets, deferred taxes and related valuation allowances, allocation of corporate general expenses, and the valuation of the assets and liabilities acquired in business combinations.

Current wording

Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenues and expenses, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements. These estimates and assumptions include promotional discounts, manufacturer coupons and rebates, return allowances that are netted against revenue, useful lives and impairment of long-lived assets, goodwill and impairment, equity method investments and equity method investments impairment, allowance for credit losses, inventory provisions, deferred taxes and related valuation allowances, allocation of corporate general expenses, stock-based compensation, and the valuation of the assets and liabilities acquired in business combinations.