The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, and our 2026 Form 10-K. Certain information in this Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. You can identify these forward-looking statements by the words “believes,” “intends,” “expects,” “may,” “will,” “should,” “plans,” “projects,” “contemplates,” “budgets,” “predicts,” “estimates,” “anticipates,” or similar expressions. These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties, and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our 2026 Form 10-K under the heading “Risk Factors.” A reader, whether investing in our common stock or not, should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law. When used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise indicates, “PetMed Express,” “PetMeds,” “PetMed,” “the Company,” “we,” “our,” and “us” refer to PetMed Express, Inc. and its direct and indirect wholly owned subsidiaries, taken as a whole. The Company’s fiscal year end is March 31, and references herein to fiscal 2027 or fiscal 2026 refer to the Company's fiscal years ending March 31, 2027 and 2026, respectively. Executive Summary PetMed Express, Inc. and subsidiaries, d/b/a PetMeds®, and PetCareRx, Inc., a subsidiary of PetMed Express Inc., d/b/a PetCareRx® (collectively, the “Company”), is a leading nationwide direct-to-consumer pet pharmacy and online provider of prescription and non-prescription medications, foods, supplements, supplies and partner with providers to offer various vet services for dogs, cats and horses. PetMeds markets and sells directly to consumers through its websites, toll-free numbers, and mobile application. We offer consumers an attractive alternative for obtaining pet medications, foods, and supplies in terms of expertise, convenience, price, speed of delivery, and valued customer service. Founded in 1996, our executive headquarters offices are currently located at 420 South Congress Avenue, Delray Beach, Florida 33445, and our telephone number is (561) 526-4444. We have a March 31 fiscal year end. Presently, our product line includes approximately 6,500 SKUs of the most popular pet medications, health products and supplies for dogs, cats, and horses. We market our products through national and local advertising campaigns which aim to increase the recognition of the “PetMeds” brand name, and "PetCareRx" brand name, increase traffic on our websites at www.petmeds.com and www.petcarerx.com, acquire new customers, and maximize repeat purchases. Our sales consist of products sold mainly to retail consumers. The average order value was approximately $101 and $99 per order for the quarters ended June 30, 2026, and June 30, 2025, respectively. Critical Accounting Policies and Estimates There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our 2026 Annual Report on Form 10-K, filed on June 2, 2026. Economic Conditions, Challenges, and Risk Macroeconomic factors, including inflation, increased interest rates, significant capital market and supply chain volatility, and political, global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. In addition, rising fuel, utility, and food costs, rising interest rates, and recessionary fears may impact customer demand and our ability to forecast consumer spending patterns. We also expect the 17 current macroeconomic environment and consumer discretionary spending to impact our revenue growth rates. We expect some or all of these factors to continue to impact our operations for the remainder of fiscal 2027. Results of Operations The following should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the related notes thereto included elsewhere herein. The following table sets forth, as a percentage of sales, certain operating data appearing in our unaudited Condensed Consolidated Statements of (Loss) Income: Three Months Ended June 30, 2026 2025 Sales 100.0 % 100.0 % Cost of sales 72.4 71.9 Gross profit 27.6 28.1 Operating expenses: General and administrative 27.3 25.3 Advertising 10.3 11.8 Depreciation and amortization 5.2 4.5 Impairment of goodwill and intangible assets — 53.3 Total operating expenses 42.8 94.9 Loss from operations (15.2) (66.8) Total other income (loss) 0.2 — Loss before provision (benefit) for income taxes (15.0) (66.8) Provision (benefit) for income taxes — — Net loss (15.0) % (66.8) % Non-GAAP Financial Measures Adjusted EBITDA To provide investors and the market with additional information regarding our financial results, we have disclosed (see below) adjusted EBITDA, a non-GAAP financial measure that we calculate as net income excluding share-based compensation expense (benefit), depreciation and amortization, income tax provision, interest income (expense), and other non-operational expenses. We have provided reconciliations below from net loss, the most directly comparable GAAP financial measure, to adjusted EBITDA. We have included adjusted EBITDA herein because it is a key measure used by our management and Board of Directors to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and other expenses. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. We believe it is useful to exclude non-cash charges, such as share-based compensation expense (benefit), and depreciation and amortization from our adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision and interest income (expense), as neither are components of our core business operations. We also believe 18 that it is useful to exclude other non-operational expenses, employee severance, impairment of goodwill and intangible assets, and interest expense relating to an estimated unremitted prior sales tax accrual as these items are not indicative of our ongoing operations. Adjusted EBITDA has limitations as a financial measure, and these non-GAAP measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: •Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures; •Adjusted EBITDA does not reflect net share-based compensation. Share-based compensation has been, and will continue to be for the foreseeable future, a material recurring expense in our business and an important part of our compensation strategy; •Adjusted EBITDA does not reflect interest income (expense), net; or changes in, or cash requirements for, our working capital; •Adjusted EBITDA does not reflect transaction related costs and other items which are either not representative of our underlying operations or are incremental costs that result from an actual or planned transaction and include litigation matters, integration consulting fees, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems; •Adjusted EBITDA does not reflect certain non-operating expenses including the employee severance which reduces cash available to us; •Adjusted EBITDA does not reflect certain non-operating expenses (income) including sales tax expense (income) relating to recording a liability for sales tax we did not collect from our customers. •Other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces the measure’s usefulness as comparative measures. Because of these and other limitations, adjusted EBITDA should only be considered as supplemental to, and alongside with other GAAP based financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results. 19 The following tables present a reconciliation of net (loss) income, the most directly comparable GAAP measure, to Adjusted EBITDA for each of the periods indicated: Three Months Ended Increase (Decrease) ($ in thousands, except percentages) June 30, 2026 June 30, 2025 $ % Consolidated Reconciliation of GAAP Net Loss to Adjusted EBITDA: Net loss $ (6,145) $ (34,152) $ 28,007 82 % Add (subtract): Stock-based Compensation 198 591 (393) (66) % Income Taxes 13 9 4 44 % Depreciation and Amortization 2,148 2,283 (135) (6) % Interest Expense (Income), Net 338 198 140 71 % Employee Severance — 95 (95) n/m Professional Fees (1) — 1,021 (1,021) n/m Impairment of goodwill and intangible assets — 27,258 (27,258) n/m Adjusted EBITDA $ (3,448) $ (2,697) $ (751) 28 % (1) Consists of professional fees related to the completed Audit Committee investigation as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025. Three Months Ended June 30, 2026 Compared With June 30, 2025 Net Sales Sales decreased by approximately $10.2 million, or 19.9%, to approximately $41.0 million for the three months ended June 30, 2026, compared to approximately $51.2 million for the three months ended June 30, 2025. The decrease in sales for the three months ended June 30, 2026 was primarily driven by a decline in prescription medication sales slightly offset by lower consumer promotional usage. Reorder sales decreased by approximately $8.5 million, or 20.5%, to approximately $32.8 million for the three months ended June 30, 2026, compared to approximately $41.3 million for the three months ended June 30, 2025. The decrease in reorder sales for the three months ended June 30, 2026 is primarily due to a decline in prescription medication sales. New order sales decreased by approximately $1.7 million or 20.2%, to approximately $6.6 million for the three months ended June 30, 2026, compared to $8.2 million for the three months ended June 30, 2025. The decrease for the three months ended June 30, 2026 in new order sales is primarily due to decreased variable marketing spend. We acquired approximately 70,000 new customers for the three months ended June 30, 2026 compared to approximately 85,000 new customers for three months ended June 30, 2025. The following tables illustrate revenue by various revenue classifications: Three Months Ended June 30, Increase (Decrease) Net Sales (in thousands) 2026 % 2025 % $ % Reorder sales $ 32,842 80.1 % $ 41,305 80.7 % $ (8,463) (20.5) % New order sales 6,583 16.1 % 8,245 16.1 % (1,662) (20.2) % Membership fees 1,590 3.9 % 1,630 3.2 % (40) (2.5) % Total net sales $ 41,015 100.0 % $ 51,180 100.0 % $ (10,165) (19.9) % 20 The Company defines new order sales as sales from customers who have not previously ordered from the Company over the past twelve months. Recurring net sales, which includes AutoShip & Save subscriptions, and membership- related revenue, as a percentage of total gross sales was 61.5% for the most recent quarter ended June 30, 2026, up from 57.6% for the same period last year. Going forward, sales may be adversely affected due to increased competition and consumers giving more consideration to price. The changes in consumer behavior due to macroeconomic factors makes future sales somewhat challenging to predict. No guarantees can be made that sales will grow in the future. Cost of Sales Cost of sales decreased by approximately $7.1 million, or 19.3%, to approximately $29.7 million for the three months ended June 30, 2026, from approximately $36.8 million for the three months ended June 30, 2025. Cost of sales, as a percentage of sales, was 72.4% for the three months ended June 30, 2026, compared to 71.9% for the three months ended June 30, 2025. The year over year increase for cost of sales, as a percentage of sales for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to lower manufacturer rebates as a percentage of sales, partially offset by lower net freight costs per order. Gross Profit Gross profit decreased by approximately $3.1 million, or 21.3%, to approximately $11.3 million for the three months ended June 30, 2026, from approximately $14.4 million for the three months ended June 30, 2025. The gross margin percentage decreased by approximately 0.5%, to approximately 27.6% for the three months ended June 30, 2026, from approximately 28.1% for the three months ended June 30, 2025. Gross profit and gross margin percentage decreased primarily due to lower manufacturer rebates as a percentage of sales, partially offset by lower net freight costs per order. General and Administrative Expenses General and administrative expenses decreased by approximately $1.8 million, or 13.5%, to approximately $11.2 million for the three months ended June 30, 2026, from approximately $12.9 million for the three months ended June 30, 2025. The decrease to general and administrative expenses for the three months ended June 30, 2026 was primarily driven by the decrease of non operating professional fees of $(1.0) million and severance of $(0.1) million, as well as a decrease of share-based compensation of $(0.4) million, lower credit card processing fees of ($0.2M), and ($0.1M) lower other general and administrative expenses. Advertising Expenses Advertising expenses decreased by approximately $1.8 million, or 30.2%, to approximately $4.2 million for the three months ended June 30, 2026, from approximately $6.0 million for the three months ended June 30, 2025. The decrease for the three months ended June 30, 2026 can be mainly attributed to the strategic reduction in gross media spend and the elimination of unproductive media spend. As a percentage of sales, advertising expense was 10.3% and 11.8% for three months ended June 30, 2026 and 2025, respectively. The advertising percentage may fluctuate quarter to quarter due to seasonality and advertising availability. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, was $60 for the three months ended June 30, 2026 compared to $71 for the three months ended June 30, 2025. The decrease to customer acquisition costs for the three months ended June 30, 2026, was due to advertising and media spend optimization, including the elimination of unproductive media spend and overall strategic reductions in certain other marketing costs. The advertising cost of acquiring a new customer can be impacted by the advertising environment, the effectiveness of our advertising creative, spending, and price competition. Historically, the advertising environment fluctuates due to supply and demand. A more favorable advertising environment may positively impact future sales, whereas a less favorable advertising environment may negatively impact future sales. Depreciation and Amortization Depreciation and amortization expense was $2.1 million and $2.3 million for the three months ended June 30, 2026 and June 30, 2025, respectively. 21 Other (Expense) Income, Net Other (expense) income, net increased to approximately $0.1 million for the three months ended June 30, 2026 compared to approximately $(11) thousand for the three months ended June 30, 2025. The increase to other (expense) income for the three months ended June 30, 2026 was due to higher interest expense accruals on sales tax liabilities which was slightly offset by an increase in rental income from the Delray Beach property. Interest income may increase or decrease in future periods based on several factors, including changes in our cash balances driven by operational cash flows, future investments, or proceeds from potential asset dispositions, as well as shifts in the prevailing interest rate environment. Provision for Income Taxes For the three months ended June 30, 2026 and 2025, the Company recorded an income tax provision of $13 thousand and $9 thousand, respectively. The effective tax rate for the three months ended June 30, 2026 was approximately (0.2)%, compared to approximately 0.0% for the three months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 differs from the statutory rate primarily as a result of the Company maintaining a valuation allowance against its deferred tax assets. Liquidity and Capital Resources Overview During the three months ended June 30, 2026, the Company experienced a lower year-over-year rate of net sales decline as net sales declined 19.9% compared with 22.7% during the three months ended June 30, 2025. Net cash used in operating activities declined to $7.7 million compared to $12.3 million used during the prior-year period. At June 30, 2026, cash and cash equivalents declined to $13.1 million compared to $21.4 million at March 31, 2026. The Company continued to experience recurring declining net sales, recurring operating losses and negative operating cash flow. Management determined that the continued execution of its strategic plan, the primary elements of which include optimizing advertising and media spending, reducing operating expenses, and limiting capital expenditures, remains probable of both being effectively implemented and of mitigating the conditions that raised substantial doubt. As of the issuance of these financials, management has concluded that substantial doubt about the Company’s ability to continue as a going concern for the next twelve months is alleviated by management’s plan. Subsequent to quarter end, on July 23, 2026, the Company, through a wholly-owned subsidiary, entered into a purchase and sale agreement under which the Company agreed to sell its properties located at 410 and 420 South Congress Avenue, Delray Beach, Florida, which includes the Company's headquarters and Florida distribution center buildings, for an aggregate purchase price of $37.0 million. The contract also provides that, upon the closing of the sale, the Company will enter into a 10-year triple-net lease agreement with the Buyer to lease back 100,519 square feet of space at 420 South Congress Avenue. The Company anticipates the transaction to close in the third quarter of fiscal 2027, subject to a customary due diligence period, execution of a definitive lease agreement, and other customary closing conditions. Current Sources of Liquidity Our working capital at June 30, 2026 and March 31, 2026 was $(13.0) million and $(8.4) million, respectively. The $4.6 million decrease in working capital was attributable to the $16.0 million decrease in current assets, primarily cash, which were partially offset by the $11.4 million decrease in current liabilities, primarily accounts payable. Net cash used in operating activities was $7.7 million for the three months ended June 30, 2026, compared to cash used in operating activities of $12.3 million for the three months ended June 30, 2025. The $4.6 million decrease in cash used in operating activities was primarily due to the $28.0 million decrease in net loss and $7.3 million decrease in cash used to fund inventories, partially offset by the absence of the prior-year non-cash impairment charge of $27.3 million and a $5.1 million decrease in cash used to fund account payable. Net cash used in investing activities was $0.6 million for the three months ended June 30, 2026, compared to $1.3 million in the prior-year period. Net cash used in financing activities was $4.9 thousand and $30.0 thousand for the three months ended June 30, 2026 and June 30, 2025, respectively. 22 The Board of Directors reviews and discusses the capital allocation needs of the Company on a quarterly basis, and as part of that review, on October 26, 2023, our Board of Directors elected to suspend the quarterly dividend indefinitely. This action was intended to focus use of the Company’s existing cash and cash flow on growth initiatives and other, higher return initiatives. The declaration and payment of future dividends is discretionary and will be subject to a determination by the Board of Directors. As of June 30, 2026, we had $0.4 million in outstanding lease commitments assumed as part of the PetCareRx acquisition for the leases on two buildings. Other than the foregoing leases, we are not currently bound by any material long-term or short-term commitments for the purchase or lease of capital expenditures. Any material amounts expended for capital expenditures would be the result of an increase in the capacity needed to adequately provide for any future increase in our business. To date we have paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being the case in the future. Our primary source of working capital is cash from operations. We presently have no alternative sources of working capital and have no commitments.