Cyanotech Reports 19.3% Sales Increase and Improved Profitability in Q2 Fiscal 2026

Cyanotech Corporation reported its financial results for the second quarter of fiscal 2026, revealing a net sales increase of 19.3% to $6.976 million, compared to $5.845 million in the same period last year. The company achieved a gross profit of $2.393 million, representing a gross margin of 34.3%, up from 25.3% in the prior year. This improvement in profitability was attributed to higher production volumes and price increases for certain packaged products. Despite the positive sales growth, Cyanotech recorded a net income of only $1, a significant improvement from a net loss of $1.150 million in the previous year.

In the first half of fiscal 2026, Cyanotech's net sales rose 9.0% to $12.797 million, driven primarily by a substantial increase in bulk sales of astaxanthin and spirulina, which grew by 91.1% and 26.7%, respectively. However, packaged sales saw a slight decline of 2.3%. The company’s gross profit margin also improved, increasing by 7.4 percentage points to 32.6%, reflecting enhanced operational efficiencies and cost management strategies. Operating expenses decreased by approximately 4.9% to $4.730 million, indicating effective cost control measures.

Cyanotech's balance sheet as of September 30, 2025, showed total assets of $24.027 million, up from $23.490 million at the end of the previous fiscal year. Current liabilities increased to $11.892 million, compared to $10.243 million, primarily due to higher accounts payable and accrued expenses. The company’s cash position improved to $649,000, up from $257,000, while working capital decreased to $39,000 from $302,000, reflecting ongoing liquidity challenges.

The company continues to face operational challenges, including compliance with debt covenants. As of March 31, 2025, Cyanotech was not in compliance with certain financial covenants, leading to a freeze on additional advances from its line of credit. The company has since converted this line into a term loan, with a maturity extended to March 31, 2026. To address cash flow issues, Cyanotech has implemented cost-saving initiatives, including reducing production in line with customer demand and maintaining a reduced headcount.

Looking ahead, Cyanotech aims to stabilize production volumes and enhance its market presence, particularly in e-commerce. The company plans to focus on higher-margin consumer products while exploring opportunities for bulk sales both domestically and internationally. However, management cautioned that future results may be impacted by various factors, including market conditions, competition, and operational challenges, emphasizing the need for careful management of cash resources and production levels.