Quest Narrows Q3 Loss Amid Revenue Dip, Strategic Asset Sale

TL;DR

**QRHC is shedding non-core assets to stem losses, but the revenue hit is a concern; watch for sustained profitability post-restructuring.**

AI Summary

Quest Resource Holding Corporation (QRHC) reported a net loss of $1.349 million for the three months ended September 30, 2025, a significant improvement from the $3.386 million net loss in the same period of 2024. However, for the nine months ended September 30, 2025, the net loss widened to $13.726 million from $5.555 million in the prior year. Revenue decreased by 12.9% to $63.341 million for the quarter and by 12.4% to $191.311 million for the nine-month period, primarily due to the sale of its mall-related business on March 31, 2025, which generated approximately $5.0 million in cash proceeds and resulted in a $4.4 million loss on sale of assets. Operating expenses decreased to $10.392 million for the quarter from $12.641 million, largely due to reduced depreciation and amortization. The company's cash and cash equivalents increased to $1.146 million as of September 30, 2025, from $396 thousand at December 31, 2024, driven by $8.506 million in net cash provided by operating activities for the nine months.

Why It Matters

Quest's strategic divestiture of its mall-related business, while impacting revenue, aims to streamline operations and improve profitability, which is crucial for investor confidence in a competitive waste management sector. The significant reduction in quarterly net loss, despite a revenue decline, suggests improved operational efficiency and cost control, potentially signaling a more focused business model. For employees, this could mean a shift in operational priorities, while customers might experience changes in service offerings as Quest refines its core business. The broader market will watch if this strategic pivot allows Quest to better compete with larger players by focusing on higher-margin services.

Risk Assessment

Risk Level: medium — The company reported a substantial net loss of $13.726 million for the nine months ended September 30, 2025, compared to $5.555 million in the prior year, indicating ongoing profitability challenges. While the quarterly net loss improved, the significant decline in revenue by 12.4% for the nine-month period to $191.311 million, partly due to asset sales, suggests a shrinking operational base that could impact future growth.

Analyst Insight

Investors should monitor Quest's upcoming earnings reports closely for signs of sustained profitability and revenue stabilization following the asset sale. Evaluate the impact of the $5.0 million asset sale and potential Milestone Payments on future cash flow and debt reduction. Consider if the reduced operating expenses and improved quarterly net loss are indicative of a long-term positive trend or merely a one-off adjustment.

Financial Highlights

debt To Equity

N/A

revenue

$63.341M

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

-$1.349M

eps

N/A

gross Margin

N/A

cash Position

$1.146M

revenue Growth

-12.9%

Revenue Breakdown

Key Numbers

• $1.349M — Net Loss (Q3 2025) (Improved from $3.386M net loss in Q3 2024)
• $13.726M — Net Loss (9 Months 2025) (Widened from $5.555M net loss in 9 months 2024)
• $63.341M — Revenue (Q3 2025) (Decreased from $72.766M in Q3 2024)
• $191.311M — Revenue (9 Months 2025) (Decreased from $218.562M in 9 months 2024)
• $5.0M — Asset Sale Proceeds (Cash received from sale of mall-related business)
• $4.4M — Loss on Sale of Assets (Recognized in Q1 2025 from mall-related business sale)
• $1.146M — Cash and Cash Equivalents (As of Sept 30, 2025, up from $396K at Dec 31, 2024)
• $8.506M — Net Cash from Operating Activities (For nine months ended Sept 30, 2025, compared to $(1.319)M in 2024)
• 12.9% — Q3 Revenue Decrease (Year-over-year decline in quarterly revenue)
• 12.4% — 9-Month Revenue Decrease (Year-over-year decline in nine-month revenue)

Key Players & Entities

• Quest Resource Holding Corporation (company) — Registrant
• Lincoln Waste Solutions, LLC (company) — Purchaser of mall-related business assets
• NASDAQ (regulator) — Exchange where common stock is registered
• SEC (regulator) — Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• $1.349 million (dollar_amount) — Net loss for Q3 2025
• $13.726 million (dollar_amount) — Net loss for nine months ended Sept 30, 2025
• $63.341 million (dollar_amount) — Revenue for Q3 2025
• $191.311 million (dollar_amount) — Revenue for nine months ended Sept 30, 2025
• $5.0 million (dollar_amount) — Cash proceeds from asset sale

FAQ

Risk Factors

• Liquidity Concerns [medium — financial]: While cash and cash equivalents increased to $1.146 million as of September 30, 2025, from $396 thousand at December 31, 2024, driven by operating cash flow, the company's ability to generate consistent profitability and manage its debt obligations remains a concern given the net losses reported.
• Dependence on Key Customers/Suppliers [medium — operational]: The company's business model may rely on a limited number of key customers or suppliers. Any disruption in these relationships could materially impact revenue and operations.
• Economic Downturn Impact [medium — market]: A general economic downturn could reduce demand for the company's services, impacting revenue and profitability. The reported revenue decrease of 12.9% in Q3 2025 suggests sensitivity to market conditions.
• Environmental Regulations [medium — regulatory]: As a company involved in resource management, Quest Resource Holding Corp is subject to various environmental regulations. Changes in these regulations or non-compliance could lead to significant costs and operational disruptions.
• Loss on Sale of Assets [low — financial]: The company recognized a $4.4 million loss on the sale of its mall-related business in Q1 2025. Such events can negatively impact financial results and indicate strategic shifts that may carry execution risks.

Industry Context

Quest Resource Holding Corp operates in the waste management and recycling industry, which is increasingly focused on sustainability and circular economy principles. The industry faces evolving regulatory landscapes and growing demand for environmentally responsible solutions. Competition can be intense, with players ranging from large national firms to smaller regional operators.

Regulatory Implications

The company must navigate environmental regulations related to waste handling, recycling, and emissions. Compliance is critical to avoid penalties and maintain operational licenses. Changes in environmental policies could impact operational costs and business strategies.

What Investors Should Do

1. Monitor revenue trends and drivers post-mall business divestiture.
2. Analyze the sustainability of operating cash flow generation.
3. Evaluate the company's strategy for profitability improvement.

Key Dates

• 2025-03-31: Sale of mall-related business — Resulted in $5.0 million cash proceeds and a $4.4 million loss on sale of assets, impacting quarterly and year-to-date financial results.
• 2025-09-30: End of Q3 and Nine-Month Period — Reporting period for the 10-Q, showing a reduced net loss for the quarter but a widened net loss for the nine months, alongside decreased revenues.

Glossary

Net Loss

The total expenses incurred by a company exceed its total revenues over a specific period. (Indicates the company's profitability. QRHC reported a net loss of $1.349 million for Q3 2025.)

Cash and Cash Equivalents

Includes cash on hand, bank deposits, and short-term, highly liquid investments with original maturities of three months or less. (Represents the company's most liquid assets. QRHC's cash position improved to $1.146 million as of September 30, 2025.)

Net Cash Provided by Operating Activities

The net amount of cash generated from a company's normal business operations. (A key indicator of a company's ability to generate cash internally. QRHC reported $8.506 million for the nine months ended September 30, 2025.)

Loss on Sale of Assets

The amount by which the selling price of an asset is less than its book value. (Impacts net income. QRHC recorded a $4.4 million loss from the sale of its mall-related business.)

Year-Over-Year Comparison

Compared to the prior year, Quest Resource Holding Corp. has seen a significant reduction in its net loss for the third quarter of 2025 ($1.349 million vs. $3.386 million), indicating improved short-term profitability. However, the nine-month net loss has widened considerably ($13.726 million vs. $5.555 million), primarily due to the strategic divestiture of its mall-related business which resulted in a $4.4 million loss on sale of assets. Revenue has declined year-over-year for both the quarter and the nine-month period, reflecting the impact of this divestiture. Operating expenses have decreased, largely due to lower depreciation and amortization, contributing to the quarterly net loss improvement. Cash position has strengthened significantly, driven by positive operating cash flows.

Key Financial Figures

• $0.001 — hares of the registrant's common stock, $0.001 par value, outstanding. TABLE OF CONT

Filing Documents

• qrhc-20250930.htm (10-Q) — 1957KB
• qrhc-ex31_1.htm (EX-31.1) — 17KB
• qrhc-ex31_2.htm (EX-31.2) — 17KB
• qrhc-ex32_1.htm (EX-32.1) — 7KB
• qrhc-ex32_2.htm (EX-32.2) — 8KB
• 0001193125-25-274169.txt ( ) — 8298KB
• qrhc-20250930.xsd (EX-101.SCH) — 1122KB
• qrhc-20250930_htm.xml (XML) — 1530KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 23

Controls and Procedures

Item 4. Controls and Procedures 23

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 24

Risk Factors

Item 1A. Risk Factors 24

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 24

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 24

Other Information

Item 5. Other Information 24

Exhibits

Item 6. Exhibits 25

Signatures

Signatures 26 1 P ART I. FINANCIAL INFORMATION I tem 1. Financial Statements (Unaudited) QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Par Value Amounts) September 30, December 31, 2025 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,146 $ 396 Accounts receivable, less allowance for doubtful accounts of $ 784 and $ 831 as of September 30, 2025 and December 31, 2024, respectively 50,746 62,252 Prepaid expenses and other current assets 2,120 2,601 Assets held for sale — 9,890 Total current assets 54,012 75,139 Goodwill 81,065 81,065 Intangible assets, net 8,429 12,946 Property and equipment, net, and other assets 5,779 6,495 Total assets $ 149,285 $ 175,645 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 39,323 $ 39,899 Deferred revenue 69 1,001 Current portion of notes payable 1,406 1,651 Liabilities held for sale — 1,840 Total current liabilities 40,798 44,391 Notes payable, net 65,391 76,265 Other long-term liabilities 1,087 833 Total liabilities 107,276 121,489 Commitments and contingencies Stockholders' equity: Preferred stock, $ 0.001 par value, 10,000 shares authorized, no shares issued or outstanding as of September 30, 2025 and December 31, 2024 — — Common stock, $ 0.001 par value, 200,000 shares authorized, 20,850 and 20,606 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 21 21 Additional paid-in capital 180,825 179,246 Accumulated deficit ( 138,837 ) ( 125,111 ) Total stockholders' equity 42,009 54,156 Total liabilities and stockholders' equity $ 149,285 $ 175,645 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 QUEST RESOURCE HO

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