med-20260630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from________ to ________.

Commission File Number: 001-31573

Medifast, Inc.

(Exact name of registrant as specified in its charter)


Delaware						13-3714405
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1501 S. Clinton Street

Baltimore, Maryland 21224

Telephone Number: (410) 581-8042

(Address of Principal Executive Offices, Zip Code and Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

MED

New York Stock Exchange

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of the registrant’s common stock outstanding at July 27, 2026 was 11,180,703.

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Medifast, Inc. and Subsidiaries

Index


Part 1 – Financial Information



Item 1 – Financial Statements


Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025			2

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025			3

Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2026 and December 31, 2025			4

Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2026 and 2025			5

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025			6

Notes to Condensed Consolidated Financial Statements (unaudited)			7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			16

Item 3 – Quantitative and Qualitative Disclosures about Market Risk			24

Item 4 – Controls and Procedures			25

Part II – Other Information

Item 1 – Legal Proceedings			26

Item 1A – Risk Factors			26

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			26

Item 5 – Other Information			26

Item 6 – Exhibits			27

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(U.S. dollars in thousands, except per share amounts & dividend data)


	Three months ended June 30,				Six months ended June 30,
	2026		2025		2026		2025

Revenue	$	76,384	$	105,555	$	152,428	$	221,283
Cost of sales	22,988		28,911		47,276		60,395
Gross profit	53,396		76,644		105,152		160,888

Selling, general, and administrative	57,723		77,710		112,774		163,217

Loss from operations	(4,327)		(1,066)		(7,622)		(2,329)

Other income
Interest income	1,347		1,369		2,726		2,671
Other income (expense)	(11)		2,572		(36)		3,059
	1,336		3,941		2,690		5,730

Income (loss) before provision for income taxes	(2,991)		2,875		(4,932)		3,401

Provision for income taxes	109		395		290		1,693

Net income (loss)	$	(3,100)	$	2,480	$	(5,222)	$	1,708

Earnings (loss) per share - basic	$	(0.28)	$	0.23	$	(0.47)	$	0.16

Earnings (loss) per share - diluted	$	(0.28)	$	0.22	$	(0.47)	$	0.15

Weighted average shares outstanding
Basic	11,135		10,991		11,071		10,970
Diluted	11,135		11,060		11,071		11,045

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(U.S. dollars in thousands)


	Three months ended June 30,				Six months ended June 30,
	2026		2025		2026		2025

Net income (loss)	$	(3,100)	$	2,480	$	(5,222)	$	1,708

Other comprehensive income, net of tax:
Unrealized net losses on investment securities	(22)		(60)		(222)		(1)

Comprehensive income (loss)	$	(3,122)	$	2,420	$	(5,444)	$	1,707

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(U.S. dollars in thousands, except par value)


	June 30, 2026		December 31, 2025

ASSETS
Current Assets
Cash and cash equivalents	$	71,910	$	89,303
Inventories, net	21,181		20,228
Investments	97,911		77,970
Income taxes, prepaid	5,258		5,116
Prepaid expenses and other current assets	5,774		9,066
Total current assets	202,034		201,683

Property, plant and equipment, net of accumulated depreciation	27,980		31,230
Right-of-use assets	24,314		7,232
Other assets	6,073		7,828



TOTAL ASSETS	$	260,401	$	247,973

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	36,406	$	38,359

Current lease obligations	5,158		4,603
Total current liabilities	41,564		42,962

Lease obligations, net of current lease obligations	22,460		6,091


Total liabilities	64,024		49,053

Stockholders' Equity
Common stock, par value $0.001 per share: 20,000 shares authorized;
11,181 and 10,991 issued and outstanding
at June 30, 2026 and December 31, 2025, respectively	11		11
Additional paid-in capital	43,306		40,406
Accumulated other comprehensive income	11		234
Retained earnings	153,049		158,269

Total stockholders' equity	196,377		198,920

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	260,401	$	247,973

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(U.S. dollar in thousands)


	Six months ended June 30,
	2026		2025

Operating Activities
Net income (loss)	$	(5,222)	$	1,708
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization	6,929		7,325
Non-cash lease expense	2,288		2,299
Share-based compensation	3,714		4,557
Gain on sale of assets held for sale	(2,184)		—
Loss on disposal of property, plant and equipment	63		395
Realized gain on sale of investment securities	(14)		(3,303)
Amortization of discount on investment securities	(314)		(358)

Unrealized loss on equity investment securities	77		—

Change in operating assets and liabilities:
Inventories	(953)		12,220
Prepaid expenses and other current assets	1,839		585
Other assets	104		(308)
Accounts payable and accrued expenses	(4,229)		(19,094)
Income taxes	(142)		(5,998)
Net cash flow provided by operating activities	1,957		28

Investing Activities
Purchase of investment securities	(94,781)		(31,062)
Proceeds from sale and maturities of investment securities	74,843		45,265
Proceeds from sale of assets held for sale, net of costs to sell	3,637		—
Purchase of property and equipment	(2,065)		(2,900)
Net cash flow provided by (used in) investing activities	(18,366)		11,303

Financing Activities



Net shares repurchased for employee taxes	(814)		(370)
Cash dividends paid to stockholders	(170)		(195)

Net cash flow used in financing activities	(984)		(565)

Foreign currency impact	—		—

Increase (decrease) in cash and cash equivalents	(17,393)		10,766
Cash and cash equivalents - beginning of the period	89,303		90,928
Cash and cash equivalents - end of period	$	71,910	$	101,694

Supplemental disclosure of cash flow information:
Income taxes paid	$	239	$	7,104
Dividends included in accounts payable and accrued expenses	$	74	$	452

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

(U.S. dollars in thousands)


	Six months ended June 30, 2026
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total

Balance, December 31, 2025	10,991	$	11	$	40,406	$	234	$	158,269	$	198,920
Net loss	—	—		—		—		(2,122)		(2,122)
Share-based compensation	212	—		1,896		—		—		1,896
Net shares repurchased for employee taxes	(84)	—		(814)		—		—		(814)
Other comprehensive loss	—	—		—		(201)		—		(201)
Forfeiture of dividends on unvested awards	—	—		—		—		2		2


Balance, March 31, 2026	11,119	$	11	$	41,488	$	33	$	156,149	$	197,681
Net loss	—	—		—		—		(3,100)		(3,100)
Share-based compensation	62	—		1,818		—		—		1,818
Other comprehensive loss	—	—		—		(22)		—		(22)


Balance, June 30, 2026	11,181	$	11	$	43,306	$	11	$	153,049	$	196,377


	Six months ended June 30, 2025
	Number of Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total

Balance, December 31, 2024	10,938	$	11	$	33,136	$	180	$	176,782	$	210,109
Net loss	—	—		—		—		(772)		(772)
Share-based compensation	80	—		1,930		—		—		1,930
Net shares repurchased for employee taxes	(27)	—		(369)		—		—		(369)
Other comprehensive income	—	—		—		59		—		59
Forfeiture of dividends on unvested awards	—	—		—		—		2		2

Balance, March 31, 2025	10,991	$	11	$	34,697	$	239	$	176,012	$	210,959
Net income	—	—		—		—		2,480		2,480
Share-based compensation	—	—		2,627		—		—		2,627
Net shares repurchased for employee taxes	—	—		(1)		—		—		(1)
Other comprehensive loss	—	—		—		(60)		—		(60)

Balance, June 30, 2025	10,991	$	11	$	37,323	$	179	$	178,492	$	216,005

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MEDIFAST, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of Medifast, Inc. and its wholly-owned subsidiaries (“Medifast,” the “Company,” “we,” “us,” or “our”) included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and notes that are normally required by GAAP have been condensed or omitted. However, in the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included and management believes the disclosures that are made are adequate to make the information presented not misleading. The condensed consolidated balance sheet at December 31, 2025 has been derived from the 2025 audited consolidated financial statements at that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“2025 Form 10-K”).

The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of results that may be expected for the fiscal year ending December 31, 2026. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the 2025 Form 10-K.

Presentation of Financial Statements - The unaudited condensed consolidated financial statements included herein include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

The Company is, from time to time, subject to a variety of litigation and similar proceedings that arise out of the ordinary course of its business. Based upon the Company’s experience, current information and applicable law, it does not believe that these proceedings and claims will have a material adverse effect on its results of operations, financial position or liquidity. However, the results of legal actions cannot be predicted with certainty. Therefore, it is possible that the Company’s results of operations, financial condition or cash flows could be materially adversely affected in any particular period by the unfavorable resolution of one or more legal actions.

Advertising Expense - The costs of advertising efforts are expensed as incurred. They are recorded in selling, general, and administrative expense in the accompanying Condensed Consolidated Statements of Operations (Unaudited). Advertising expense, excluding agency fees, for the three months ended June 30, 2026 and 2025 amounted to $0.2 million and $1.6 million, respectively. Advertising expense, excluding agency fees, for the six months ended June 30, 2026 and 2025 amounted to $0.4 million and $6.2 million, respectively.

Assets Held for Sale - During the year ended December 31, 2024, the Company completed a supply chain optimization initiative with the goal of aligning the Company’s distribution footprint with current demand levels. On June 28, 2024, the Company closed its Maryland Distribution Center located in Ridgely, Maryland. The Company listed the Maryland Distribution Center building and land for sale, and categorized those assets as held for sale. The net book value of the building and land was $1.4 million. The assets were recorded within prepaid expenses and other current assets on the consolidated balance sheets included in the 2025 Form 10-K. The Company closed on the sale of the land and building in February 2026, receiving $3.6 million in proceeds, net of costs to sell, and recognizing a gain on sale of $2.2 million presented within selling, general, and administrative on the Condensed Consolidated Statements of Operations (Unaudited).

Provision for Income Taxes - The Company computes its income tax provision for interim periods in accordance with Accounting Standards Codification 740. For interim periods during the year ended December 31, 2025, the Company calculated an annual effective tax rate and applied that rate to year-to-date ordinary income or loss to calculate its quarterly income tax provision (“AETR Approach”). Due to the existence of a full valuation allowance against its deferred tax assets recorded as of December 31, 2025, the Company did not apply the AETR Approach for the period ending June 30, 2026 or for the quarters within that period. Instead, the Company calculated income tax expense for the interim period based on actual results for the quarter. As a result, the Company’s income tax provision for the three months ending June 30, 2026, reflects discrete items,

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primarily state income taxes. Income tax expense for the three months ended June 30, 2026, was $0.1 million, an effective rate of negative 3.6%, as compared to $0.4 million, an effective tax rate of 13.7%, for the three months ended June 30, 2025. The decrease in the effective tax rate was primarily driven by the increased loss incurred in the June 30, 2026, period and the valuation allowance on the net deferred tax assets. For the six months ended June 30, 2026, the Company recorded $0.3 million in income tax expense, an effective tax rate of negative 5.9%, as compared to $1.7 million, an effective tax rate of 49.8%, for six months ended June 30, 2025. The decrease in the effective tax rate was primarily driven by the increased loss incurred in the six months ended June 30, 2026, period and the valuation allowance on the net deferred tax assets. The Company will continue to assess the realizability of its deferred tax assets and the need for a valuation allowance on a quarterly basis. Should the valuation allowance be released in whole or in part, the Company expects to return to applying an estimated annual effective tax rate in future interim periods.

Accounting Pronouncements - Adopted in 2026

The Company has not adopted any new accounting standards during the six months ended June 30, 2026.

Recently Issued Accounting Pronouncements - Pending Adoption

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2024-03—Disaggregation of Income Statement Expenses (“ASU 2024-03”) to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements.

In September 2025, the FASB issued Accounting Standards Update 2025-06— Internal-Use Software (Subtopic 250-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”) to increase the operability of the recognition guidance considering different methods of software development. ASU 2025-06 is effective for public business entities for annual periods beginning after December 15, 2027. The amendments can be adopted on a prospective, modified, or retrospective basis. Entities are permitted to early adopt the standard. The Company did not early adopt prior to or during the current reporting period. The Company is currently evaluating the impact of adopting the ASU 2025-06 on its consolidated financial statements.

2. INVENTORIES, NET

Inventories consist principally of raw materials, packaging, non-food finished goods and packaged meal replacements, protein powder, and supplements held in the Company’s warehouses and outsourced distribution centers. Inventories are stated at the lower of cost or net realizable value, utilizing the first-in, first-out method. The cost of finished goods includes the cost of raw materials, packaging supplies, direct and indirect labor, and other indirect manufacturing costs. On a quarterly basis, management reviews inventories for unsalable or obsolete inventories.

Inventories consisted of the following (in thousands):


	June 30, 2026		December 31, 2025

Raw materials	$	6,257	$	4,915
Packaging	1,584		1,654
Non-food finished goods	796		1,216
Finished goods	15,879		16,785
Allowance for obsolete inventory	(3,335)		(4,342)
Total	$	21,181	$	20,228

3. EARNINGS PER SHARE

Basic earnings per share (“EPS”) computations are calculated utilizing the weighted average number of shares of the Company’s common stock outstanding during the periods presented. Diluted EPS is calculated utilizing the weighted average number of shares of the Company’s common stock outstanding adjusted for the effect of dilutive common stock equivalents.

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The following table sets forth the computation of basic and diluted EPS (in thousands, except per share data):


	Three months ended June 30,				Six months ended June 30,
	2026		2025		2026		2025

Numerator:
Net income (loss)	$	(3,100)	$	2,480	$	(5,222)	$	1,708

Denominator:
Weighted average shares of common stock outstanding	11,135		10,991		11,071		10,970
Effect of dilutive common stock equivalents	—		69		—		75
Weighted average shares of common stock outstanding	11,135		11,060		11,071		11,045

Earnings (loss) per share - basic	$	(0.28)	$	0.23	$	(0.47)	$	0.16

Earnings (loss) per share - diluted	$	(0.28)	$	0.22	$	(0.47)	$	0.15

The Company was in a loss position for the three and six months ended June 30, 2026, and as such, all equity awards were antidilutive for those periods. If the Company were not in a loss position, the calculation of diluted EPS would have included the effect of dilutive common stock equivalents of 344 thousand and 251 thousand, and would have excluded 342 thousand and 132 thousand antidilutive restricted stock awards for three and six months ended June 30, 2026, respectively. The calculation of diluted EPS excluded 402 thousand and 375 thousand antidilutive restricted stock awards for the three and six months ended June 30, 2025, respectively. EPS is computed independently for each of the periods presented above, and accordingly, the sum of the quarterly earnings per share may not equal the year-to-date total computed.

4. SHARE-BASED COMPENSATION

Stock Options

The Company has granted non-qualified and incentive stock options to employees under the Amended and Restated 2012 Share Incentive Plan (the “2012 Plan”). The fair values of these options were estimated on the grant dates using the Black-Scholes option pricing model, which required estimates of the expected term of the option, the risk-free interest rate, the expected volatility of the price of the Company’s common stock, and dividend yield. Options outstanding as of June 30, 2026, generally vested over a period of 3 years and expire 10 years from the date of grant. The exercise price of these options is $66.68. Due to the Company’s lack of option exercise history on the date of grant, the expected term was calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each option. The risk-free interest rate was based on the U.S. Treasury yield curve in effect on the date of grant that most closely corresponded to the expected term of the option. The expected volatility was based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. The dividend yield was computed as the annualized dividend rate at the

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grant date divided by the strike price of the stock option. For the six months ended June 30, 2026 and 2025, the Company did not grant stock options.

The following table is a summary of our stock option activity (in thousands, except per share data):


	Six months ended June 30,
	2026			2025
	Awards	Weighted-Average Exercise Price		Awards	Weighted-Average Exercise Price

Outstanding at beginning of period	22	$	66.68	22	$	66.68
Exercised	—	—		—	—
Forfeited	—	—		—	—
Outstanding at end of the period	22	$	66.68	22	$	66.68
Exercisable at end of the period	22	$	66.68	22	$	66.68

As of June 30, 2026, the weighted-average remaining contractual life for both the outstanding stock options and exercisable stock options was 1.6 years with an aggregate intrinsic value of $0. There was no unrecognized compensation on the awards for the periods ended June 30, 2026 and 2025. There were no stock options exercised for the six months ended June 30, 2026 and 2025. For the six months ended June 2026 and 2025, the Company received no cash proceeds from the exercise of stock options.

Restricted Stock

The Company has granted restricted stock under the 2012 Plan to employees and non-employee directors generally with vesting terms up to 3 years after the date of grant. The fair value of the restricted stock is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period.

The following table summarizes our restricted stock activity (in thousands, except per share data):


	Six months ended June 30,
	2026			2025
	Shares	Weighted-Average Grant Date Fair Value		Shares	Weighted-Average Grant Date Fair Value

Outstanding at beginning of period	677	$	24.76	279	$	57.21
Granted	490	10.19		533	13.75
Vested	(257)	29.61		(80)	67.29
Forfeited	(68)	14.59		(10)	19.42
Outstanding at end of the period	842	$	15.62	722	$	24.53

The Company withheld approximately 76 thousand shares and 27 thousand shares of the Company’s common stock to cover minimum tax liability withholding obligations upon the vesting of shares of restricted stock for the six months ended June 30, 2026 and 2025, respectively. The total fair value of restricted stock awards vested during the six months ended June 30, 2026 and 2025 was $2.6 million and $1.1 million, respectively.

Market and Performance-based Share Awards

The Company has granted market and performance-based share awards in 2023, and 2025, and performance-based share awards in 2024 and 2026 under the 2012 Plan to certain key executives who were granted deferred shares and may earn between 0% and 210% of the target number depending upon both the Company’s total stockholder return (“TSR”), for those with market conditions, and the Company’s performance against predetermined performance goals over a three-year performance period after the date of grant. Market and performance-based share awards that are tied to the Company’s TSR are valued using the Monte Carlo method and are recognized ratably as expense over the award’s performance period. The fair

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value of the performance-based share awards is equal to the market price of the Company’s common stock on the date of grant adjusted by the expected level of achievement over the performance period. Expense for performance-based share awards is amortized ratably over the performance period. In the event that management determines that the Company will not reach the lower threshold of the predetermined performance goals established in the grant agreement, any previously recognized expense is reversed in the period in which such a determination is made.

The total fair value of market and performance-based share awards issued during the six months ended June 30, 2026 was $0.2 million. The Company withheld approximately 8 thousand shares for the six months ended June 30, 2026 to cover minimum tax liability withholding obligations upon the issuance of shares of market and performance-based share awards. No market and performance-based share awards were issued during the six months ended June 30, 2025, as a result of the market and performance-based share awards granted in March of 2022 not reaching the lower threshold of the predetermined performance goals.

Share-based compensation expense is recorded in selling, general, and administrative expense in the accompanying Condensed Consolidated Statements of Operations (Unaudited). The total expense during the three months ended June 30, 2026 and 2025 was as follows (in thousands):


	Three months ended June 30,
	2026			2025
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	864	$	1,371	744	$	1,644
Performance-based share awards granted in 2026	173	147		—	—
Market and performance-based share awards granted in 2025	275	257		319	434
Performance-based share awards granted in 2024	35	43		117	371
Market and performance-based share awards granted in 2023	—	—		47	178
Total share-based compensation	1,347	$	1,818	1,227	$	2,627

The total expense during the six months ended June 30, 2026 and 2025 was as follows (in thousands):


	Six months ended June 30,
	2026			2025
	Shares	Share-Based Compensation Expense		Shares	Share-Based Compensation Expense
Options and restricted stock	864	$	2,734	744	$	2,998
Performance-based share awards granted in 2026	173	161		—	$	—
Market and performance-based share awards granted in 2025	275	662		319	468
Performance-based share awards granted in 2024	35	157		117	737
Market and performance-based share awards granted in 2023	—	—		47	354
Total share-based compensation	1,347	$	3,714	1,227	$	4,557

The total income tax benefit recognized in the accompanying Condensed Consolidated Statements of Operations (Unaudited) for restricted stock awards was $0.1 million and $0.3 million for the three months ended June 30, 2026 and 2025, respectively, and income tax expense of $0.5 million and of $0.1 million for the six months ended June 30, 2026 and 2025, respectively.

There was $8.1 million of total unrecognized compensation expense related to restricted stock awards as of June 30, 2026, which is expected to be recognized over a weighted-average period of 1.9 years. There was $3.9 million of unrecognized compensation expense related to the 275 thousand market and performance-based shares and 208 thousand performance-based shares presented in the table above as of June 30, 2026, which is expected to be recognized over a weighted-average period of 1.8 years.

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5. LEASES

Operating Leases

The Company has operating leases for office and warehouse space and certain equipment. In certain of the Company’s lease agreements, the rental payments are adjusted periodically based on defined terms within the lease. The Company did not have any finance leases for the six months ended June 30, 2026 and 2025.

Our leases relating to office and warehouse space have lease terms of 87 months to 125 months. Our leases relating to equipment have lease terms of 36 months, with certain of them having automatic renewal clauses.

The Company’s warehouse agreements also contain non-lease components, in the form of payments towards variable logistics services and labor charges, which the Company is obligated to pay based on the services consumed by it. Such amounts are not included in the measurement of the lease liability but are recognized as expenses when they are incurred.

The operating lease expense was $1.3 million and $1.2 million for the three months ended June 30, 2026 and 2025, and $2.6 million and $2.5 million for the six months ended June 30, 2026 and 2025.

Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands):


	Six months ended June 30,
	2026		2025

Cash paid for amounts included in the measurements of lease liabilities
Operating cash flow used in operating leases	$	2,884	$	3,215

Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	19,370	$	—

As of June 30, 2026, the weighted average remaining lease term was 5 years, 4 months and the weighted average discount rate was 4.60%.

The following table presents the maturity of the Company’s operating lease liabilities as of June 30, 2026 (in thousands):


2026 (excluding the six months ended June 30, 2026)	$	3,077
2027	6,548
2028	6,782
2029	4,546
2030	4,208
Thereafter	6,357
Total lease payments	$	31,518
Less: Imputed interest	(3,900)
Total	$	27,618

During the three months ended June 30, 2026, the Company executed an amendment to extend the lease and reduce the square footage for our distribution facility located at 2000 Rock Glenn Boulevard, Havre De Grace, Maryland 21078 with a term of 5 years (the “HdG Lease”). The amendment to the HdG Lease commenced in June 2026, at which time the Company remeasured its right-of-use asset and corresponding lease liability by $12.5 million and $12.7 million, respectively. The future minimum lease commitments related to the HdG Lease are included in the table above.

During the six months ended June 30, 2026, the Company’s lease commenced for a new headquarters office space in 1501 South Clinton Street, Baltimore, Maryland 21224, with a lease term of 8 years and 7 months. The Company recorded an initial right-of-use asset and corresponding lease liability of $6.8 million during the period ended March 31, 2026. The Company did

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not renew its office space lease in 100 International Drive, Baltimore, Maryland 21202 which expired in February 2026. The future minimum lease commitments related to this lease are included in the table above.

6. ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth the components of accumulated other comprehensive income, net of tax where applicable (in thousands):


	June 30, 2026		December 31, 2025

Foreign currency translation	$	3	$	3
Unrealized net gains on investment securities	8		231
Accumulated other comprehensive income	$	11	$	234

7. INVESTMENTS

Certain financial assets and liabilities are accounted for at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an on-going basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant.

The following tables present the Company’s cash and financial assets that are measured at fair value on a recurring basis for each of the hierarchy levels (in thousands):


	June 30, 2026
	Cost		Unrealized Gains (Losses)		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash and cash equivalents, excluding money market accounts	$	50,764	$	—	$	—	$	50,764	$	50,764	$	—

Level 1:
Money market accounts	21,146		—		—		21,146		21,146		—
Government & agency securities	42,488		71		71		42,630		—		42,630

	63,634		71		71		63,776		21,146		42,630

Level 2:
Corporate bonds	54,827		(61)		515		55,281		—		55,281

Total	$	169,225	$	10	$	586	$	169,821	$	71,910	$	97,911

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	December 31, 2025
	Cost		Unrealized Gains		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash and cash equivalents, excluding money market accounts	$	50,187	$	—	$	—	$	50,187	$	50,187	$	—

Level 1:
Money market accounts	39,116		—		—		39,116		39,116		—
Government & agency securities	23,247		111		80		23,438		—		23,438
	62,363		111		80		62,554		39,116		23,438

Level 2:
Corporate bonds	53,801		198		533		54,532		—		54,532

Total	$