Innovative Food (OTCMKTS:IVFH) CEO Gary Schubert said fiscal 2025 was a “learning year” that revealed a widening gap between the company’s growth ambitions and the systems and operating architecture supporting them, a mismatch that became most evident in the fourth quarter.
In his second earnings call as chief executive, Schubert told investors the company is “rebuilding the foundation the right way,” prioritizing stabilization, modernization, disciplined execution, and cash preservation rather than pursuing a near-term “headline turnaround.”
Fiscal 2025 results and fourth-quarter pressure
For continuing operations, GAAP net income was $2.5 million, or $0.046 per fully diluted share, and adjusted EBITDA was $2.4 million, Schubert said.
Performance weakened in the fourth quarter, when revenue declined 18.1% year over year. By channel, Schubert said:
- Digital channels declined 13.4%.
- National distribution declined 14.1%.
- Local distribution declined 32.3%.
Despite the revenue decline, fourth-quarter GAAP net income from continuing operations increased to $797,000 from $685,000 in the prior-year quarter. Adjusted EBITDA fell to $718,000 from $1.3 million, according to Schubert.
The company ended the year with about $927,000 of unrestricted cash. Schubert said that liquidity level “reinforces why disciplined execution and cash preservation are central priorities for 2026.”
Mountaintop facility sale used to repay debt
Schubert also disclosed that after year-end, on March 6, 2026, the company completed the sale of its Mountaintop, Pennsylvania facility for $9.225 million. He said the proceeds were used to repay the MapleMark loan and interest in full, and restricted cash tied to the property was released, further simplifying the balance sheet.
While Schubert said net proceeds after transaction costs and debt repayment were “modest,” he described the transaction as strategically important because it removed a non-core asset, improved financial flexibility, and sharpened the company’s focus on continuing operations.
Root cause: complexity outpacing operating architecture
Schubert said the fourth-quarter pressure was not confined to “one customer, one facility, or one business line,” but instead reflected broader enterprise complexity exceeding what the current operating model can support.
He pointed to fragmented systems, aging applications, and integrations requiring “too much manual intervention” as the common thread behind disruptions across the business.
In digital, Schubert said the transition of the company’s “largest legacy customer, US Foods,” from an older marketplace environment to a newer direct environment created disruption. He added that other customer-side ERP and integration changes also required rework on Innovative Food’s side, which proved difficult to absorb with an “older and more fragmented technology stack.”
In national distribution, Schubert said a relocation of airline-related activity from Pennsylvania to Chicago led to temporary inefficiencies in order intake, billing, item setup, vendor setup, and service execution.
In local distribution, he cited “operational inconsistencies, forecasting gaps, procurement issues, and ongoing integration work” that created strain on Chicago and Denver operations. While the symptoms differed by channel, Schubert said the root cause was the same: an operating stack that is too fragmented and manual to support needed speed, visibility, and precision.
Channel commentary: digital maturity curve, national transition, and local challenges
Schubert said he does not view the digital opportunity as impaired, but rather sees the supporting architecture as “incomplete.” He emphasized that the company’s problem is not simply adding items, but moving items through a “maturity curve” faster and more consistently—from intake, to setup, to transactability, to broad discoverability—while keeping items accurate, competitive, and commercially healthy over time.
He outlined digital priorities that include improving item setup quality and vendor onboarding, shortening the maturity curve, expanding points of distribution, increasing the percentage of items that are fully transactable and broadly discoverable, and strengthening discipline around ongoing item maintenance. Schubert said the company is also using an “AI-enabled hub” to improve workflow speed and “first-time accuracy” at the front end, while noting the “last mile remains the critical constraint.”
Schubert said the company is seeing “encouraging directional signs” in upstream item setup, vendor onboarding, and points-of-distribution work, but he is not ready to provide formal public operating metrics on those indicators. He said publicly disclosed KPIs must be clearly defined and consistently measured to avoid misinterpretation, adding that he cannot yet say when they will be ready for disclosure.
In national distribution, Schubert said the quarter’s revenue decline reflected ongoing execution work related to the Pennsylvania-to-Chicago transition, including the loss of certain legacy Pennsylvania capabilities such as specialty cheese cutting tied to discontinued operations. He also noted airline-related business became more competitive during the quarter. Still, he said the company does not view this as deterioration in the channel’s underlying relevance, but rather a combination of transition friction, capability changes, and competitive dynamics that must be addressed with tighter execution, improved cost positioning, and stronger service reliability.
For local distribution, Schubert said both Chicago and Denver were under pressure. Chicago’s challenges included service consistency, forecasting discipline, procurement execution, and integration strain. In Denver, he cited customer losses and margin pressure, while noting continued work on integration intended to create more enterprise synergy.
Schubert added that Denver is beginning to participate in the broader digital model, which he described as early but strategically meaningful. If Denver-sourced inventory can move through digital channels, he said it could improve working capital velocity, expand digital assortment, and leverage the existing fulfillment footprint without adding unnecessary overhead.
Modernization roadmap and 2026 priorities
Schubert framed modernization—starting with ERP evaluation—as the company’s most important strategic action. He said the current ERP, Great Plains, remains a system of record, but emphasized that modernization goes beyond ERP to include surrounding applications, workflow tools, and integration layers that have become “too fragmented” and dependent on legacy workarounds and institutional knowledge.
He described the effort as an operating model project aimed at simplifying data structures, standardizing workflows, improving item and vendor governance, reducing integration friction, increasing visibility, and laying a foundation for automation and AI. Schubert warned that failing to modernize would leave the company slower in onboarding items, reacting to customer changes, supporting vendors, managing exceptions, improving discoverability, and making sourcing and pricing decisions—resulting in more manual work, rework, and weaker competitiveness.
Schubert said the company committed in the fourth quarter of 2025 to a modernization path that extends beyond ERP into pricing governance, item setup, vendor onboarding, maturity-curve acceleration, ongoing item maintenance, and end-to-end order flow, calling it a “multi-quarter effort.”
As the effort progresses, he said the company will remain disciplined and avoid adding complexity faster than the platform can absorb it. Schubert said Innovative Food is not focused on pursuing new acquisitions or taking on additional debt “at this time,” and does not plan to expand into entirely new channels before the core foundation is ready.
Looking ahead, Schubert characterized 2026 as a year of stabilization, modernization, disciplined execution, and commercial growth. He told investors success will not be defined solely by revenue growth, but also by stronger operating discipline, better systems alignment, improved liquidity, and measurable progress against the modernization roadmap. “Our objective is not simply to grow,” Schubert said. “Our objective is to build a more scalable, more disciplined, and more resilient IVFH.”
About Innovative Food (OTCMKTS:IVFH)
Innovative Food Holdings, Inc, through its subsidiaries, distributes specialty food and food related products to restaurants, hotels, country clubs, national chain accounts, casinos, hospitals, and catering houses in the United States. The company distributes perishable and specialty food and food related products, including origin-specific seafood, domestic and imported meats, exotic game and poultry, artisanal cheeses, freshly prepared meals, caviar, wild and cultivated mushrooms, micro-greens, organic farmed and manufactured food products, estate-bottled olive oils and aged vinegars, and curated food gift baskets and gift boxes, as well as a full range of food subscription based offerings.
