Honest Company Revenue Falls 8.6%, Tax Lifts Profit

The Honest Company reported third-quarter revenue of $84.6 million, down 8.6% year over year but above analyst estimates. The decline largely reflected its planned exit from lower-margin and noncore businesses, while organic revenue rose 9.2% as the company focused on wipes and personal care. Net income surged to $91.3 million, but $89.4 million came from a one-time, noncash release of a deferred-tax-asset valuation allowance; adjusted profit was $3.1 million. Adjusted EBITDA was $6.3 million, with a 7.9% margin, while adjusted gross margin reached a record 48.9% excluding transformation-related costs. The company also reported quarterly EPS above analysts’ estimate, and its stock rose about 5% after the results.