Synergy CHC’s Earnings Call Balances Pain And Promise

Synergy Chc Corp ((SNYR)) has held its Q4 earnings call. Read on for the main highlights of the call.

Synergy CHC’s latest earnings call painted a complex picture for investors. Heavy one‑time charges dragged headline results deep into the red, yet management stressed that underlying margins, liquidity, and new growth platforms remain intact, arguing that the worst of the clean‑up is now behind the company.

Beverage business shows early momentum

Synergy’s emerging beverage unit was a rare bright spot, generating more than $600,000 in gross revenue in Q1 2026, already topping all beverage sales in 2025. Management said this implies roughly a $2.5 million annual run rate, supported by millions of ready‑to‑drink and shot cans already produced and ready to ship.

New Mexico subsidiary opens international door

The company formed a wholly owned subsidiary in Mexico and began first shipments to Costco Mexico in December 2025. Executives see this as a beachhead for building a broader retail network in a key international market, positioning the brand to capture incremental growth outside the U.S. over time.

Kroger rollout deepens supplement footprint

Synergy also expanded its core supplements presence, shipping three new SKUs to roughly 1,600 Kroger stores across the chain. Management framed this national rollout as a way to reinforce its retail shelf space and support future same‑store gains once broader marketing is restarted.

Cash and working capital markedly improve

Despite weak GAAP earnings, the balance sheet looks healthier, with cash and equivalents rising to $2.6 million from about $688,000 a year earlier. Working capital swung from a $1.12 million deficit to a $1.78 million surplus, reflecting better collections and more room to fund operations.

Operating cash burn trends in the right direction

Cash used in operating activities fell to $2.6 million for 2025, compared with $4.8 million in the prior year. Management attributed this improvement to tighter working capital management and the impact of noncash charges, suggesting cash performance is better than the income statement alone implies.

Underlying gross margins remain robust

Reported full‑year gross margin slipped modestly to 66.8% from 67.9%, pressured by write‑offs of obsolete inventory. Adjusting for these items, management said normalized gross margin would have been about 70.3%, with Q4 around 68.8%, signaling that core profitability per unit sold remains strong.

Revenue hit by license reversal and softer demand

Q4 net revenue fell to $6.07 million from $10.27 million, a steep 41% drop year over year. A roughly $2.9 million reversal of licensing revenue tied to a terminated UAE and Turkey agreement accounted for much of the decline, and without it Q4 revenue would still be down about 13% to $8.97 million.

Deep quarterly and annual net losses

The company posted a Q4 net loss of $14.82 million, or $1.35 per diluted share, versus a small profit in the prior‑year quarter. For 2025, Synergy recorded a $12.3 million net loss, or $1.27 per share, compared with $2.1 million of net income in 2024, underscoring the scale of the earnings reversal.

One‑time charges drive much of the damage

Management emphasized that several major nonrecurring items weighed on the year, including a $6.66 million bad debt allowance. Additional write‑offs of about $1.04 million in obsolete inventory and roughly $0.9 million in prepaid media credits also hit results, contributing heavily to the margin and earnings slump.

Operating costs spike on clean‑up and deals

Q4 operating expenses surged to $15.53 million from $5.14 million, largely because of the bad debt allowance and other write‑offs. Even excluding these items, Q4 OPEX was about $8 million and full‑year adjusted OPEX roughly $21.24 million, higher than 2024 due to professional fees tied to corporate development.

Adjusted EBITDA swings sharply lower

On an adjusted basis, profitability also deteriorated, with Q4 adjusted EBITDA falling to a $4.48 million loss from $2.79 million of income a year ago. For 2025 as a whole, adjusted EBITDA dropped to $0.8 million from $7.35 million, highlighting pressure on the underlying earnings power even before one‑time items.

Flat Tummy brand faces category headwinds

The company’s Flat Tummy weight‑loss line remains under pressure as GLP‑1 drugs reshape the slimming market. Management signaled that a strategic decision on the brand is coming, acknowledging that category‑level disruption is forcing a reassessment of where to allocate capital and focus.

TV advertising remains an untapped lever

Synergy did not restart TV advertising in 2025, despite seeing it as a key growth engine for same‑store supplement sales. Executives estimate that reactivating TV could deliver at least a 15% lift in same‑store sales, making the continued delay a notable missed opportunity but also a clear potential catalyst.

Guidance points to margin stability and growth bets

Looking ahead, management expects normalized gross margins to hold or improve from the roughly 68% to 70% range outlined for Q4 and 2025. They see the beverage division accelerating in 2026 on the back of Q1 momentum and broad distribution efforts, while TV advertising, expanded Kroger SKUs, and a stronger balance sheet are expected to support execution.

Synergy’s call left investors weighing substantial GAAP losses and category challenges against improving liquidity, resilient margins, and early traction in beverages and Mexico. If management can convert its clean‑up efforts and growth initiatives into steady revenue and EBITDA, the stock could pivot from repair mode to a more sustainable growth phase.