MusclePharm Corporation, a U.S. nutritional supplements company based out of Denver, reported net revenue decreased $10 million, or 23 percent, sequentially to $32.9 million for the three months ended June 30, 2016, compared to $42.9 million for the three months ended March 31, 2016. The Q2 decrease was primarily due to the strategic reduction in sales of unprofitable product lines and SKUs, the elimination of unprofitable licensing agreements and migration of some existing products to a new supplier.
Gross profit for the second quarter 2016 was $10.7 million, or 33 percent of revenue, compared to $15.2 million, which was 35 percent of revenue in the first quarter 2016.
Operating expenses decreased to $12.2 million, compared to $21 million for the first quarter 2016 as the company continued to execute its restructuring plan and focus on optimizing its cost structure.
Net loss for the second quarter 2016 was $4.2 million, compared to $6.6 million in the first quarter 2016.
Adjusted EBITDA, a non-GAAP financial measure, was a loss of $43,000 compared to income of $3.2 million for the first quarter 2016.
“We’re reengineering the business to where we’re profitable,” said Ryan Drexler, MusclePharm interim CEO, president and chairman of the board of directors. “It’s about strategically aligning ourselves and building a strong foundation to create a legacy business around our most popular products.”
Drexler reiterated that the company’s strength is in its partnerships with key retailers and distributors rather than endorsements involving costly and often unknown future financial commitments.
In June 2016 MusclePharm filed a counterclaim against Capstone Nutrition, alleging that Capstone fraudulently induced MusclePharm into a multi-year manufacturing contract by misrepresenting Capstone’s ability to fulfill its obligations and concealing significant operational problems occurring at its facilities. MusclePharm attested that the result of Capstone’s actions included months of delivery delays, lost customers and damaged goodwill that cost MusclePharm tens of millions of dollars. They are now currently working with new manufacturing partners and has resumed production and distribution of products previously made by Capstone.
The MusclePharm Corp. portfolio of brands includes MusclePharm Sport Series, Black Label and Core Series and FitMiss, which are available in more than 120 countries and 50,000-plus retail outlets worldwide.
Photo courtesy MusclePharm
