Restructuring, Contract Termination and Impairment Charges

6 Months Ended

Jun. 30, 2025

Restructuring and Related Activities [Abstract]

Restructuring, Contract Termination and Impairment Charges

In the first half of 2025, management and the Board of Directors of the Company engaged strategic consulting firms to assist the Company with improving financial results from its operations. This operational improvement effort involved the engagement of restructuring, legal and investment banking consultants to perform financial planning, forecasting and project management activities. Certain of these strategic consulting firms have assisted and are expected to continue to assist the Company in developing and improving operational plans for the near- and long-term, identifying

cost saving initiatives to reduce the operational expenses of the Company and aid in the development of enhanced internal reporting to deliver timely insight to management. Expenses related to these strategic consulting firms recognized within restructuring were $2.8 million and $6.5 million for the three and six months ended June 30, 2025, respectively.

The cost saving initiatives identified and executed upon in the six months ended June 30, 2025 are designed to reduce operational expenditures over the long-term, and as a result, in the short-term, the realized benefits from these initiatives have been limited. The key cost saving initiatives and operational planning activities undertaken in the first half of 2025 in excess of $0.5 million, for which the Company recorded the related charges to restructuring, contract termination and impairment charges on the consolidated statements of operations and comprehensive income (loss) as applicable, were as follows (all amounts listed are year to date, with the amounts for the three months ended June 30, 2025 included in the table below):

•Restructuring

◦retention payments to key personnel to support the sustainment of operations and focus on cost saving and operational improvements, resulting in a restructuring charge of $5.7 million;

◦reduction in force (“RIF”) of management and non-management personnel in an effort to align headcount with the operational needs of the business, resulting in a moderate decline in related expenses in the short term, with the significance of the savings anticipated to be recognized in future periods, resulting in a restructuring charge of $0.9 million;

◦expenses related to the strategic consulting firms discussed above, resulting in a restructuring charge of $6.5 million;

•Contract Terminations

•termination of an underperforming licensing agreement in an effort to redeploy the allocated funds for operational purposes, resulting in a charge to contract termination of $2.5 million;

•settlement of a termination fee with a former advertising services vendor, with a previously accrued balance of $5.4 million that was settled for $4.0 million, a $1.4 million benefit to the Company; and

•closure of two distribution centers to reduce fixed costs in the short term and in future periods, as well as eliminate unnecessary capacity, resulting in charges to restructuring of $0.5 million, contract termination of $0.2 million and impairment of $0.5 million, or an aggregate charge to expense of $1.2 million.

The components of the restructuring, contract termination and impairment charges are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025	2024
Restructuring charges(1)	$	9,023	$	—	14,231	—
Impairment charges	—		—		471	—
Contract termination	1,228		—		1,388	—
Total restructuring, contract termination and impairment charges	$	10,251	$	—	16,090	—

(1) Includes other immaterial amounts that are not outlined in the narrative above.

The changes in restructuring liabilities for the six months ended June 30, 2025 are as follows:


(in thousands)	Restructuring Charges
Balance at December 31, 2024	$	—
Restructuring charges	14,231
Payments	(13,324)
Non-cash restructuring charges	(318)
Balance at June 30, 2025	$	589

The following table summarizes the current liabilities related to the restructuring charges:


(in thousands)	June 30, 2025		December 31, 2024
Accounts payable	$	137	$	—
Accrued expenses and other current liabilities	452		—
Total current liabilities	$	589	$	—

The Company anticipates that the strategic consulting firms’ activities will continue to occur beyond the 2025 Refinancing Amendment, although on a limited basis. The Company expects to continue to evaluate and identify additional cost saving initiatives that it may execute in the near term, with potential expenses to be incurred at the onset of said initiative that will be reflected within restructuring, contract termination and/or impairment charges. As of June 30, 2025, the Company is unable to estimate the potential upfront costs of these future cost saving initiatives, due to their preliminary nature.