HEALTHY CHOICE WELLNESS CORP.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
HOST$1.88-2.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001493152-26-023896
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001493152-26-038496
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 51 previous paragraphs and 58 current paragraphs.
36 unchanged; 9 reworded; 12 added; 6 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Net sales decreased $3.6 million to $16.6 million for the three months ended June 30, 2026 as compared to $20.2 million for the same period in 2025. The decrease was primarily attributable to a decline in same-store sales. The same-store sales decline reflects continued pressure on consumer spending. Persistent inflation across the broader economy, including elevated food-at-home prices, has reduced consumers’ purchasing power and led many customers to buy fewer items per visit or trade down to lower-priced alternatives. These industry-wide trends have negatively impacted sales volumes across the natural and organic grocery sector. The organic price premium over conventional products has widened significantly, as organic product prices have risen at a notably higher rate than conventional alternatives over the past year. This has led many consumers to choose lower-priced conventional alternatives or buy fewer organic items. At the same time, the selection of organic products available in stores has declined, reducing customer choice. Major organic brands have also reported sales declines, confirming the challenging environment for the organic sector. These factors collectively contributed to the Company’s same-store sales decline during the quarter.
Current report
Cost of goods sold for the three months ended June 30, 2026 and 2025 were $10.2 million and $12.1 million, respectively. The decrease was primarily due to lower sales volume from the same-store sales decline. Gross profit was $6.4 million and $8.1 million for the three months ended June 30, 2026 and 2025, respectively. Gross margin as a percentage of sales decreased approximately 1.5% as compared to the same period in prior year, primarily due to the reduced sales volume and continued inflationary pressure on product costs.
Current report
Total operating expenses for the three months ended June 30, 2026 and 2025 were $9.0 million and $8.1 million, respectively, representing an increase of approximately $0.9 million. The increase was primarily driven by a $0.8 million increase in payroll and benefits and professional fees, and a $0.3 million increase in non-cash stock-based compensation expense, partially offset by $0.2 million decrease in insurance, bank service charges and merchant account fees, and depreciation and amortization expense.
Current report
Net sales decreased $5.6 million to $34.9 million for the six months ended June 30, 2026 as compared to $40.5 million for the same period in 2025. The decrease was primarily attributable to a decline in same-store sales. The same-store sales reduction reflects the cumulative effect of sustained macroeconomic headwinds that have persisted throughout the first half of 2026. Elevated inflation, particularly in food categories, has continued to strain household budgets, prompting consumers to be more selective in their purchasing decisions. Many customers have reduced their average basket size or shifted toward more affordable options. Within the natural and organic sector, the organic price gap relative to conventional products has continued to widen, as organic products have experienced steeper price increases than their conventional counterparts. This pricing dynamic has accelerated the trend of consumers trading down to conventional alternatives or limiting their organic purchases. Furthermore, organic product assortment in the retail channel has contracted, and leading organic brands have reported declining sales, indicating broad-based pressure across the industry. These persistent trends have adversely affected the Company’s sales performance over the six-month period.
Current report
Cost of goods sold for the six months ended June 30, 2026 and 2025 were $21.5 million and $24.5 million, respectively. The decrease was primarily due to lower sales volume from the same-store sales decline. Gross profit was $13.3 million and $15.9 million for the six months ended June 30, 2026 and 2025, respectively. Gross margin as a percentage of sales decreased approximately 1.1% as compared to the same period in prior year, reflecting the impact of lower sales volume and persistent food inflation, which increased the cost of goods sold, while the Company maintained competitive pricing to respond to heightened consumer price sensitivity.
Current report
Total operating expenses for the six months ended June 30, 2026 and 2025 were $17.6 million and $16.4 million, respectively. The increase consists of $0.5 million increase in stock-based compensation expense and $0.7 million increase in payroll and benefit expense.
Current report
Total other expenses, net was $2.5 million for the six months ended June 30, 2026, consisting of net interest expense of $343,000, a $435,000 loss on debt extinguishment, a $1,624,000 impairment loss on equity method investment, a $83,000 loss from equity investment, and other miscellaneous expense of approximately $2,000. Total other expenses, net of $0.6 million for the six months ended June 30, 2025 consists of net interest expense of $567,000, other miscellaneous expense of approximately $1,000, and $35,000 loss on debt extinguishment.
Current report
As of June 30, 2026, the Company has operating lease obligations totaling approximately $10.2 million and finance lease obligations of approximately $0.1 million. The weighted-average remaining lease term is 3.7 years for operating leases, with a weighted-average discount rate of 6.04%.
Current report
The weighted-average discount rate increased to 6.04% from 5.30% as of December 31, 2025, reflecting changes in the Company’s incremental borrowing rates and the mix of lease renewals during the period. During the six months ended June 30, 2026, the Company renewed the leases for its stores located in West Melbourne, Florida and Shrewsbury, New Jersey, amended the lease for its store in Chester, New Jersey, and modified the lease for its store in Lawton, Oklahoma. All these lease renewal, amendment and modifications contributed to the updated weighted-average discount rate. Future lease obligations may be subject to different discount rates based on prevailing market conditions and the Company’s incremental borrowing rate at the time of renewal.
Current report
Rent expense for the three and six months ended June 30, 2026 was approximately $972,000 and $1,948,000, respectively. The Company expects rent expenses to increase incrementally over the next several years as existing leases are renewed or reset to current market rates. In addition, inflationary pressures on operating costs — including common area maintenance, property taxes, and insurance — could increase variable lease costs in future periods.
Current report
The Company continues to monitor its lease portfolio and evaluate opportunities to optimize its store footprint as part of its ongoing operational review. There are no other material known trends or uncertainties related to the Company’s lease obligations that are reasonably expected to have a material adverse impact on the Company’s liquidity, capital resources, or results of operations, other than those discussed above.
Current report
The net cash used in financing activities of $0.6 million for the six months ended June 30, 2026 consists of principal payment on loan payable of $0.6 million and approximately $13,000 payment under the finance lease. The net cash provided by financing activities of $2.6 million for the six months ended June 30, 2025 consists of net proceeds of $3.1 million from HCWC Preferred Stock offering, and principal payment on loan payable of $0.5 million.
Removed paragraphs (6)
Previous report
Net sales decreased $2.0 million to $18.2 million for the three months ended March 31, 2026 as compared to $20.2 million for the same period in 2025. The decrease consisted of a same-store sales decrease of $2.2 million, partially offset by a $0.2 million increase in CO-OP revenue.
Previous report
Cost of goods sold for the three months ended March 31, 2026 and 2025 were $11.3 million and $12.4 million, respectively. The decrease was driven by a $2.2 million reduction in net sales, which directly lowered variable cost of goods sold. Gross margin decreased 0.8 percentage points to 38.0% from 38.8% in the prior year period, primarily due to unfavorable product mix.
Previous report
Total operating expenses for the three months ended March 31, 2026 and 2025 were $8.5 million and $8.3 million, respectively. The $0.2 million increase was primarily attributable to stock-based compensation expense, which was not incurred in the prior year period.
Previous report
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 report
The following table summarizes the Company’s cash flows for the three months ended March 31, 2026 and 2025:
Previous report
Net cash used in financing activities for both the three months ended March 31, 2026 and 2025 consists of $0.3 million in principal payments on loan payable.
Reworded paragraphs (9)
Previous 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.
Current wording
The Company currently and historically has reported net losses and has reported cash outflows from operations this quarter. As of June 30, 2026, the Company had cash and cash equivalents of approximately $0.9 million and negative working capital of $6.6 million.
Previous 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.
Current wording
Total other expenses, net was $0.4 million for the three months ended June 30, 2026, consisting of net interest expense of approximately $151,000, a $259,000 loss on debt extinguishment, a $18,000 loss on equity investment in HCMC, offset by other miscellaneous income of approximately $1,000. Total other expenses, net of $0.3 million for the three months ended June 30, 2025 consists of net interest expense of approximately $269,000, other miscellaneous expense of approximately $4,000, and $27,000 loss on debt extinguishment.
Previous wording
As of March 31, 2026, the Company holds an equity method investment in its former parent HCMC, with a carrying value of approximately $2.3 million. During the three months ended March 31, 2026, the Company recorded an impairment loss of $1,623,922 on its equity method investment due to an adverse PTAB IPR ruling that materially reduced the fair value of the investee. The fair value was estimated using a multi-method approach under ASC 820, incorporating observable transaction prices and a probability-weighted litigation model. Key assumptions used in the valuation included the probability of successful outcomes in the investee’s pending litigation, the timing and amount of future cash flows, and the discount rate applied. The impairment loss is included in other income (expense) in the condensed consolidated statement of operations. Future adverse developments in the investee’s litigation, continued operating losses, further dilution of the Company’s ownership percentage, or a sustained decline in the investee’s market value could result in additional material impairment charges in future periods.
Current wording
As of June 30, 2026, the Company holds an equity method investment in its Former Parent HCMC, with a carrying value of approximately $2.2 million. During the three months ended March 31, 2026, the Company recorded an impairment loss of $1,623,922 on its equity method investment due to an adverse PTAB IPR ruling that materially reduced the fair value of the investee. No additional impairment was recognized during the three months ended June 30, 2026. The fair value was estimated using a multi-method approach under ASC 820, incorporating observable transaction prices and a probability-weighted litigation model. Key assumptions used in the valuation included the probability of successful outcomes in the investee’s pending litigation, the timing and amount of future cash flows, and the discount rate applied. The impairment loss is included in other income (expense) in the condensed consolidated statement of operations. Future adverse developments in the investee’s litigation, continued operating losses, further dilution of the Company’s ownership percentage, or a sustained decline in the investee’s market value could result in additional material impairment charges in future periods.
Previous 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.
Current wording
Our net cash used in operating activities of approximately $1.2 million for the six months ended June 30, 2026 resulted from a net loss of $6.7 million, offset by a non-cash adjustment of $6.3 million and a net cash usage of $0.8 million from changes in operating assets and liabilities. Our net cash provided by operating activities of approximately $2.2 million for the six months ended June 30, 2025 resulted from a net loss of $1.1 million, offset by a non-cash adjustment of $4.1 million and a net cash usage of $0.8 million from changes in operating assets and liabilities.
Previous 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.
Current wording
The net cash used in investing activities of $0.3 million for the six months ended June 30, 2026 consists of $0.1 million net cash advance to related party and $0.2 million purchases of property and equipment. The net cash used in investing activities of $2.1 million for the six months ended June 30, 2025 consists of $1.9 million payment to related party and $0.2 million purchases of property and equipment.
Previous 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.
Current wording
The Company reported a net loss of $6.7 million for the six months ended June 30, 2026. The Company also had negative working capital of $6.6 million. The Company expects to continue incurring losses for the foreseeable future.
Previous wording
The following discussion and analysis contain a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternative to, net income, operating income, and cash flow from operating activities, liquidity, or any other financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company, nor are they intended to be predictive of potential future financial results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
Current wording
The following discussion and analysis contain a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as an alternative to, net income, operating income, and cash flow from operating activities, liquidity, or any other financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company, nor are they intended to be predictive of potential future financial results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
Previous wording
EBITDA, or earnings before interest, taxes, depreciation, and amortization, is an alternate measure of profitability to net income. Management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of significant non-cash and non-recurring charges that effect comparability between reporting periods. We define Adjusted EBITDA as net loss adjusted for non-cash charges for depreciation and amortization, impairment of goodwill, change in contingent consideration, also adjusted for non-recurring other expense (income), and interest income. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items.
Current wording
EBITDA, or earnings before interest, taxes, depreciation, and amortization, is an alternate measure of profitability to net income. Management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of significant non-cash and non-recurring charges that effect comparability between reporting periods. We define Adjusted EBITDA as net loss adjusted for interest expense, depreciation and amortization, loss on debt settlement, equity method (gain) loss, impairment loss on equity method investment, stock compensation, loss on disposal of asset, and other income (expense), net. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items.
Previous wording
There have been no material changes to the Company’s critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2025 Annual Report, which we believe are the most critical to our business and the understanding of our results of operations and affect the more significant judgments and estimates that we use in the preparation of our condensed consolidated financial statements.
Current wording
There have been no material changes to the Company’s critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2025 Annual Report, except for the addition of policies related to equity method investments, derivative accounting, variable interest entities, and stock-based compensation, which are described in Note 3 to the condensed consolidated financial statements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The following table sets forth our unaudited condensed consolidated Statements of Operations for the six months ended June 30, 2026 and 2025 that is used in the following discussions of our results of operations: