Reed's Narrows Q3 Loss to $3.2 Million as Sales Slide to $6.5 Million

By Tom Whitfield

Reed's, Inc. (NYSEAMERICAN:REED) cut its third-quarter net loss to $3.2 million, or $0.27 per share, from $4.0 million, or $0.48 per share, a year earlier — while net sales fell to $6.5 million from $7.0 million for the three months ended Sept. 30, 2026. The beverage company lost less money on less business. That trade defines the quarter.

Interim Chief Executive Officer Neal Cohane said the turnaround plan was beginning to produce a more efficient operating structure, though he acknowledged that restoring revenue growth remained a priority. Efficiency, so far, is the only part of the plan the numbers confirm.

Where did the margin gains come from?

Gross profit rose 34% to $1.6 million. Gross margin climbed to 25% from 17% a year earlier and 24% in the second quarter. Chief Financial Officer Doug McCurdy attributed the improvement primarily to lower promotional and other allowances and to a decline in cost of goods per case, to $13.26 from $13.73.

The expense base shrank as well. Selling, general and administrative expenses fell 15% to $3.6 million. Delivery and handling expenses dropped 10% to $1.0 million, though the cost per case on that line rose to $2.69 from $2.60. The EBITDA loss improved to $2.9 million from $3.6 million.

Note what drove the margin: less promotional spending, not more full-price demand. Sales volumes with recurring national customers fell. In plain terms, the company improved its margins partly by discounting less and selling less.

What do executives promise next?

Cohane said Reed's expects fourth-quarter net sales and gross margin to improve both sequentially and against the prior-year period. McCurdy said he expects modest sequential margin improvement in the fourth quarter, with a target of reaching a gross margin in the mid-30% range around the second quarter of 2027.

Those are projections, not results, and the mid-30% target sits roughly ten points above the current level. Management did not quantify the revenue inflection.

Can distribution rebuild the top line?

Cohane said Reed's had secured more than 3,000 new retail doors year over year and regained distribution with several national and regional accounts. He estimated the company's products currently sit in roughly 32,000 to 35,000 doors.

Some accounts that left in 2025 have committed to bringing products back, primarily in the first and second quarters of 2027, he said. He expects the new placements to contribute more meaningfully in the fourth quarter and throughout 2027 as products reach shelves and build sales. Commitments to return are not yet sales.

On products, the company is developing a mixer line and working toward an additional launch in early 2027. Cohane declined to provide details, saying only that the product would differ from the current lineup and would play in a larger category than craft soda and ginger beer. Reed's plans a controlled market test with local customers and selected retail partners before any broader rollout, and expects greater emphasis on targeted digital and social media marketing in 2027.

Is the balance sheet stable?

Reed's held $2.1 million in cash against $9.25 million in total debt at the end of September. Cash used in operations fell to $0.3 million in the quarter from $2.8 million a year earlier — the most concrete improvement in the filing.

On Sept. 30, the company refinanced its $9.25 million senior secured loan, extending maturity to June 30, 2027, with an option for an additional three-month extension subject to conditions, McCurdy said.

After the quarter closed, Reed's completed a $10 million private placement on Nov. 9, issuing 17,421,602 common shares. McCurdy said the transaction satisfied an equity contribution requirement under the amended credit agreement, with net proceeds earmarked for working capital and general corporate purposes. Existing shareholders absorbed dilution of roughly 17.4 million shares to buy time and satisfy lenders.

The cash burn slowed, the loss narrowed, and the balance sheet gained runway. Revenue growth remains a promise scheduled, repeatedly, for 2027.