[8-K] Wag! Group Co. Reports Material Event

Rhea-AI Filing Summary

Simulations Plus (SLP) Q3-25 10-Q highlights

Top-line: Revenue rose 9.8% year-over-year to $20.4 million, with software up 6.0% and services up 16.8%. Nine-month revenue advanced 20.2% to $61.7 million, reflecting continued adoption of newly acquired Pro-ficiency offerings.

Margins & mix: Gross margin contracted to 64% (71% prior-year) as services mix expanded to 38% of sales and cost inflation lifted software COGS. YTD gross margin slipped to 59% (71%).

Operating expense shock: A $77.2 million non-cash impairment tied to underperforming Pro-ficiency (ALI/MC) and QSP units drove operating expense to $87.3 million, swinging operating profit to a $74.2 million loss from $1.9 million income last year.

Net results: Net loss reached $67.3 million (-$3.35 EPS) versus $3.1 million (+$0.16 EPS) in Q3-24. Ex-impairment, management’s adjusted profit would have been modestly positive, but GAAP equity fell 32% to $123.8 million on impairment charges.

Cash & liquidity: Operating cash flow stayed positive at $12.5 million (up 7.6% YTD). Cash & equivalents climbed to $27.0 million from $10.3 million at FY-24 year-end, aided by investment redemptions. The balance sheet remains debt-light with total liabilities of $10.6 million; working capital is $41.6 million.

Segment view: Software contributed 62% of quarterly sales with 80% gross margin; services 38% with 38% margin. Management reports remaining performance obligations of $16.3 million (94% recognizable within 12 months), suggesting near-term revenue visibility.

Impairment rationale: A stock-price decline and revenue underperformance at ALI/MC prompted goodwill, trade-name, and developed-technology write-downs totaling $70.8 million; capitalized software at ALI/MC also impaired by $1.2 million.

Cash flow drivers YTD: strong collections (A/R up yet manageable), $6.5 million net investment inflows, and $2.1 million capitalized R&D. Financing outflows were limited to option exercises and earn-out payments; no dividends were declared in FY-25.

Risk & outlook: While core software demand remains healthy, shrinking margins, lower service profitability, and the large impairment highlight integration risks from Pro-ficiency. Investors will watch for improved ALI/MC traction, stabilization of goodwill balances, and restoration of historical mid-teens operating margins.

Positive

• Revenue growth: Quarterly sales up 9.8% YoY and YTD sales up 20.2%, demonstrating sustained demand.
• Robust liquidity: Cash & equivalents rose to $26.9 million with no interest-bearing debt, and operating cash flow stayed positive at $12.5 million.
• Diversified customer base: No single customer exceeds 7% of revenue, lowering concentration risk.
• High software margins: Core software gross margin remains strong at 80%, underpinning profitability potential.

Negative

• Large impairment charges: $77.2 million expense led to a $67.3 million net loss and 32% drop in shareholders’ equity.
• Margin compression: Gross margin fell from 71% to 64%, with services margin down to 38%, reflecting cost pressures and mix shifts.
• Goodwill risk: Post-write-down goodwill still totals $43.5 million; further underperformance could trigger additional charges.
• Service cost escalation: Service cost of revenue jumped 23%, eroding profitability.
• Dilutive share count creep: Shares outstanding increased to 20.1 million, modestly diluting EPS.

Insights

Equity Research Analyst

TL;DR: Revenue grew ~10%, but a $77 m impairment erased earnings and cut equity; cash flow solid, outlook hinges on Pro-ficiency integration.

The 10-Q is materially negative. Core operations remain stable—software sales rose 6% and service revenue 17%—yet margin erosion and the unprecedented $70.8 million goodwill/intangible write-down signal that the Pro-ficiency acquisition is under-delivering. GAAP EPS swung from +$0.16 to –$3.35, slicing book value by one-third. Cash generation mitigates liquidity concerns: $26.9 million cash, no debt, and positive OCF offset impairment’s non-cash nature. However, gross margin fell 700 bps and service profitability slid to 38%, pressuring future earnings quality. Valuation multiples historically rely on high margins; any prolonged softness could compress them further. Near-term catalysts include evidence of ALI/MC turnaround, new software releases, and international expansion; lacking these, the write-down may foreshadow slower growth and additional charges.

Industry Specialist – Biopharma Software

TL;DR: Core biosimulation demand intact, but Pro-ficiency units faltered, forcing goodwill hits; integration risk now front-and-center.

From an industry lens, SLP’s legacy CHEM, PBPK, and CPP tools continue to grow, reflecting sector-wide digital-twin adoption. Yet the Pro-ficiency adaptive-learning suite, meant to diversify into clinical-trial enablement, underperformed quickly after acquisition, triggering a major impairment less than one year post-close. That raises questions on due-diligence rigor and cross-selling synergies. Still, 94% of $16.3 million backlog is current, indicating resilient demand pipeline. The company’s broad customer base (largest customer only 7% sales) and positive grant funding remain strengths. Future success depends on aligning Pro-ficiency’s offerings with pharma R&D budgets and restoring service margins to 40%+. Otherwise, management could revisit capital allocation priorities—potentially refocusing on high-margin modeling software.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 14, 2025

Wag! Group Co.

(Exact name of registrant as specified in its charter)

Delaware			001-40764			88-3590180
(State or other jurisdiction of incorporation)			(Commission File Number)			(IRS Employer Identification No.)

2261 Market St., Suite 85056 San Francisco, California			94114
(Address of principal executive offices)			(Zip Code)

(707) 324-4219

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

PET

The Nasdaq Global Market

Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share

PETWW

The Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.    ☐

Item 1.01 Entry into a Material Definitive Agreement

Furscription Disposition

On July 14, 2025, Wag Labs, Inc. (the “Company”) and Wag! Group Co. (the “Parent”) entered into and closed an asset purchase agreement (the “Asset Purchase Agreement”) with MWI Veterinary Supply Co. (“MWI”). Upon the terms and conditions described in the Asset Purchase Agreement, MWI purchased the Company’s software and business for veterinary e-prescriptions referred to as Furscription (the “Business”). As consideration for the transaction, MWI has agreed to pay the Company $5,000,000 in cash, $500,000 of which (the “Holdback Funds”) were held back to satisfy any indemnification obligations of the Company under the Asset Purchase Agreement, with any remaining Holdback Funds that are not utilized to be paid to the Company 18 months after the Closing Date. The assets purchased by MWI include, but are not limited to: all contracts, software, equipment, computers, accounts receivable, employees and intellectual property of the Business. Pursuant to the financing agreement by and amongst the Company, Blue Torch Finance LLC, and the other parties thereto, dated August 9, 2022, and assigned to Retriever LLC (“Retriever”) on April 11, 2025, the proceeds of the sale will go to the repayment of the Company’s indebtedness to Retriever, its secured creditor.

The Asset Purchase Agreement contains customary representations, warranties and covenants made by the Company and the Parent. The Asset Purchase Agreement has been included to provide investors and shareholders with information regarding the terms of the Asset Purchase Agreement and the transactions contemplated thereby. It is not intended to provide any other factual information about the Company or the Parent. The representations, warranties and covenants contained in the Asset Purchase Agreement were made only as of specified dates for the purposes of the Asset Purchase Agreement, were solely for the benefit of the parties to the Asset Purchase Agreement and may be subject to qualifications and limitations agreed upon by such parties. Accordingly, investors and shareholders should not rely on such representations, warranties and covenants as characterizations of the actual state of facts or circumstances described therein. Information concerning the subject matter of such representations, warranties and covenants may change after the date of the Asset Purchase Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures.

The foregoing description of the Asset Purchase Agreement does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached hereto as Exhibit 10.1.

Item 2.01 Completion of Acquisition or Disposition of Assets

Information concerning the closing of the transaction set forth in Item 1.01 above is hereby incorporated into this Item 2.01 by reference.

Item 8.01 Other Events

As previously disclosed, the Company’s Board of Directors conducted a review of strategic alternatives, including potential investments, strategic partnerships, sales, merger, or other strategic transactions involving the Company or its assets. That review process did not result in a strategic alternative transaction that would enable the Company to satisfy its obligations due under the Financing Agreement, and the proceeds from the sale of the Business described above will satisfy only a portion of the Company’s obligations under the Financing Agreement.

While the Company is currently engaged in negotiations with Retriever regarding satisfaction of its obligations under the Financing Agreement, which may enable it to continue operations, and will continue to consider any potential alternative strategic transactions, there can be no assurance that any transaction or other strategic alternative that would result in satisfaction in full of the obligations owed to Retriever will be available to the Company, approved by the Board of Directors and/or Retriever, or otherwise consummated before the maturity of the Financing Agreement in August 2025, or at all. As a result, Retriever would be able to exercise its rights and remedies under the Financing Agreement with respect to the Company and its assets.

The Company may be forced to take action to maximize the enterprise value of its assets, including, without limitation, seeking protection under bankruptcy laws.

Item 9.01    Financial Statements and Exhibits

(d) Exhibits:

Exhibit Number			Description
10.1*			MWI - Furscription Asset Purchase Agreement
104			Cover Page Interactive Data File (embedded within the Inline XBRL document).

*Schedules and Exhibits of this exhibit have been omitted pursuant to Rule 601(b)(2) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Forward-Looking Statements

This Current Report on Form 8-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast” and other similar expressions are intended to identify forward-looking statements. These statements include those related to the Company’s consideration of any potential alternative strategic transactions, protection under bankruptcy laws and negotiations with Retriever. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: the termination of the Company’s engagement of a financial advisor in connection with the strategic review process and the impact on the Company’s ability to identify any potential alternative strategic transactions, the Company’s ability to successfully negotiate with Retriever regarding satisfaction of its obligations under the Financing Agreement and continued operations, and demands, actions, lawsuits and other claims that potentially could be made by Retriever and other debt holders, the Company’s securityholders, and the Company’s and its subsidiaries’ other creditors. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the Company’s filings with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. The Company does not give any assurance that it will achieve its expectations.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			WAG! GROUP CO.
			By:			/s/ Alec Davidian
						Alec Davidian
						Chief Financial Officer
						(Principal Financial and Accounting Officer)

Date: July 15, 2025

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FAQ

How did Simulations Plus (SLP) perform financially in Q3 2025?

Revenue grew 9.8% to $20.4 million, but a $77.2 million impairment drove a net loss of $67.3 million (-$3.35 EPS).

What caused the large impairment charge at SLP?

Management cited underperformance of the Pro-ficiency ALI/MC and QSP units plus stock-price decline, leading to goodwill, trade-name and technology write-downs totaling $70.8 million.

Is Simulations Plus still generating cash?

Yes. Operating cash flow was $12.5 million for the nine months and cash on hand stood at $26.9 million with minimal liabilities.

What are SLP’s current gross margins?

Q3-25 gross margin was 64%; software margin 80% and services margin 38%, down from 71%, 88%, and 41% respectively last year.

How much revenue visibility does SLP have?

Remaining performance obligations are $16.3 million, with 94% expected to convert to revenue within 12 months.

Did SLP issue guidance for the rest of FY-25?

The 10-Q does not provide forward guidance; investors must await management commentary on future earnings calls.