Breaking Down Quest Resource Holding Corporation (QRHC) Financial Health: Key Insights for Investors

You're looking at Quest Resource Holding Corporation (QRHC) and trying to map the real financial trajectory against the market noise, and honestly, the Q3 2025 results released on November 10, 2025, present a classic mixed picture you need to untangle. The company posted a Q3 revenue of $63.3 million, which is a solid beat over analyst estimates, but still represents a 13.0% drop year-over-year, largely due to a non-core business divestiture and soft industrial volumes. The good news is the sequential momentum, with revenue up 6.4% from Q2, and Q3 Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) hitting $2.9 million, showing internal operational improvements are taking hold. Plus, management has been defintely focused on the balance sheet, reducing debt by a significant $11.2 million year-to-date, which is a key de-risking move. Your next step is to figure out if that YTD GAAP net loss of $(13.7) million is a necessary cost of restructuring or a sign of deeper trouble, especially with the consensus analyst price target hovering around $2.25.

Revenue Analysis

You need to know where Quest Resource Holding Corporation (QRHC) is making its money, and honestly, the 2025 revenue picture is a mixed bag that requires a clear-eyed look at the moving parts. The direct takeaway is that while year-over-year revenue is down due to a strategic divestiture and macroeconomic headwinds, the quarter-over-quarter trend shows a positive operational pivot.

Through the first nine months of 2025 (Year-to-Date or YTD), Quest Resource Holding Corporation reported total revenue of $191.3 million, which represents a 12.5% decrease compared to the same period in 2024. However, the third quarter (Q3 2025) revenue of $63.3 million was a 6.4% sequential increase from the second quarter, suggesting that internal efficiency initiatives are starting to gain traction.

Breakdown of Primary Revenue Sources

Quest Resource Holding Corporation operates as a national provider of environmental waste and recycling services, and its revenue is driven by servicing complex, multi-site customers across various sectors. The company's core offering is a value-added, single-source solution for managing over 100 waste streams, which is a service-based model rather than a product-sales model. This model is focused on helping clients meet their environmental, social, and governance (ESG) goals, plus reducing costs.

The primary revenue is generated from large corporate clients in these key end markets:

• Retail: Serving grocers, big box stores, and other specialty retailers.
• Automotive Aftermarket: Including quick lube, maintenance facilities, dealerships, and collision repair.
• Industrial/Manufacturing: Providing services to logistics, transportation, and fleet operators.

What this estimate hides is the impact of a strategic shift. The year-over-year revenue decline is largely attributable to two factors: the sale of a non-core business and a slowdown in a key market.

Analysis of Revenue Changes and Growth Rate

The 12.5% YTD revenue decrease is significant, but you need to understand the drivers. The decline was primarily caused by the divested mall-related business (a non-core portion of the Recycling and Waste Services business, or RWS) which was sold in the first quarter of 2025. This divestiture removed a lower-margin revenue stream, generating $5 million in cash proceeds used to pay down debt.

Here's the quick math on the near-term trend. The sequential growth in Q3 2025 is a positive sign, but the industrial segment remains a near-term risk. Revenue from industrial clients has been lower due to a challenging macroeconomic environment, leading to subdued volumes. This is a macro issue, not a company-specific one, but it still hits the top line.

For the full fiscal year, analysts project a consensus sales estimate of approximately $254.75 million, which would still be a decline from the $288.53 million reported in 2024. The company is defintely focused on organic growth, having recently signed a new contract with a major food products company and executing share-of-wallet initiatives with existing customers.

This is a transition year. The goal is to trade lower revenue for higher-quality, higher-margin business, which is why the Q3 gross margin improved to 18.1% from 16.1% in Q3 2024.

If you want to understand the strategic thinking behind these choices, you should review the company's long-term goals: Mission Statement, Vision, & Core Values of Quest Resource Holding Corporation (QRHC).

Profitability Metrics

You need to know if Quest Resource Holding Corporation (QRHC) is actually making money, or if it's just moving volume. The short answer for the first nine months of 2025 is that the company is still in a loss position on a GAAP basis, but the most recent quarter shows a clear, positive turn in operational efficiency. We're looking at a classic turnaround story where margin expansion is the key to unlocking value, especially compared to industry giants.

For the first nine months of fiscal year 2025 (YTD 2025), Quest Resource Holding Corporation reported total revenue of $191.3 million. The GAAP net loss for that period was $(13.7) million, translating to a net profit margin of approximately -7.16%. This is a significant loss, but it's crucial to look deeper at the gross and operating levels, which tell a better story about core business health.

Here's the quick math on the most recent, and most encouraging, profitability metrics from the third quarter (Q3 2025) results:

• Gross Margin: The Q3 2025 gross margin was 18.1% on $63.3 million in revenue, a strong sequential improvement.
• Operating Margin: Q3 2025 operating margin was 1.7%, a positive swing from a -1.3% margin in Q3 2024.
• Net Profit Margin: The GAAP net loss narrowed to $(1.3) million in Q3 2025, which is a big improvement from the $(3.4) million net loss in Q3 2024.

The trend in profitability over time shows a business that is stabilizing and improving its cost structure. While the YTD 2025 gross margin is slightly down at 17.5% compared to 18.0% YTD 2024, the Q3 sequential gain to 18.1% is defintely a win for operational efficiency. Management's focus on cost management is visible in the Q3 selling, general, and administrative (SG&A) expenses, which saw a $1 million year-over-year reduction. You are seeing the direct impact of their operational excellence initiatives here.

When you compare Quest Resource Holding Corporation to the broader waste management industry, the need for continued margin improvement is clear. The industry's major players, like Waste Management, Inc. (WM), operate with a much higher floor. For example, WM posted a net profit margin of 9.36% for the most recently reported quarter ending September 30, 2025. QRHC's YTD Adjusted EBITDA margin of approximately 3.76% (on $7.2 million YTD Adjusted EBITDA) also sits well below the typical 18-25% EBITDA margin seen in the Collection segment of the industry.

The operational efficiency analysis boils down to this: Quest Resource Holding Corporation is an asset-light service provider, so it won't hit the 25-30% EBITDA margins of companies that own landfills, but its current margins are still thin. The sequential growth in gross and operating margins, however, suggests they are successfully executing on their strategy to improve vendor management and streamline processes. The goal now is to maintain this trajectory to close the gap with the industry average, which is the only way to justify a higher valuation. For a deeper dive into the company's strategic position, check out the full analysis: Breaking Down Quest Resource Holding Corporation (QRHC) Financial Health: Key Insights for Investors

Debt vs. Equity Structure

You need to know how Quest Resource Holding Corporation (QRHC) funds its operations, and the short answer is: they lean heavily on debt. As of the third quarter of 2025, the company's financial structure shows a high degree of leverage, which is a key risk factor you need to weigh against their recent debt reduction efforts.

The company's total debt sits at approximately $68.41 million as of the most recent reporting period, which is substantial given their market capitalization. The good news is that management is actively addressing this, having reduced the total debt by a solid $11.2 million year-to-date through Q3 2025. This reduction was partly fueled by using the $5 million in cash proceeds from the sale of a non-core business earlier in the year to pay down their borrowings.

Here's the quick math on their leverage:

• Total Debt: ~$68.41 million
• Total Shareholder Equity: ~$42.0 million
• Debt-to-Equity (D/E) Ratio: ~1.63 (or 163%)

A Debt-to-Equity ratio of 1.63 signals high leverage, meaning Quest Resource Holding Corporation uses $1.63 of debt for every dollar of equity capital. To be fair, capital-intensive industries like waste management often carry higher debt loads. However, when you compare this to the industry's median Debt-to-Equity ratio of roughly 0.64, Quest Resource Holding Corporation is significantly more leveraged than most of its peers. This high D/E ratio, combined with a negative Return on Equity (ROE) of around -44.35%, suggests that the debt is not currently translating into profitable growth for shareholders.

The company took a proactive step to manage its long-term financing structure with a successful debt refinancing in December 2024. This move was critical for stability and cost management. The refinancing package included a $54 million term loan with an extended maturity date out to June 2030. This renegotiation is defintely a positive, as it is expected to decrease their blended interest rate margin by about 150 basis points, which should reduce annual interest expense by approximately $1 million [cite: 9, 11 from step 1]. They also increased their revolving credit facility commitment from $35 million to $45 million, boosting their immediate liquidity and financial flexibility for working capital needs [cite: 9, 11 from step 1].

The table below summarizes the key components of their financing mix, highlighting the balance between long-term stability and high leverage:

The ongoing challenge for Quest Resource Holding Corporation is to continue generating sufficient operating cash flow to service this debt while also funding organic growth initiatives. For a deeper dive into the company's full financial picture, including valuation and strategic frameworks, you can read the full post at Breaking Down Quest Resource Holding Corporation (QRHC) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Quest Resource Holding Corporation (QRHC) can cover its near-term bills, and the latest numbers from Q3 2025 give us a clear, if mixed, picture. The immediate takeaway is that the company has a solid, though not excessive, liquidity cushion, but its focus on cash cycle improvement is defintely paying off.

As of the most recent quarter, Quest Resource Holding Corporation's current ratio was 1.32, meaning the company holds $1.32 in current assets (cash, receivables, etc.) for every $1.00 in current liabilities (bills due within a year). The quick ratio (acid-test ratio), which strips out less-liquid inventory, was a tight 1.27. Anything above 1.0 is generally strong, so while these ratios are healthy, they signal a need for continued, disciplined working capital management.

Here's the quick math on their liquidity position:

• Current Ratio: 1.32 (Solid, but not overly conservative).
• Quick Ratio: 1.27 (Indicates strong ability to meet immediate obligations).
• Cash on Hand (Q3 2025): $1.1 million (A sequential increase from $450,000 in Q2 2025).

The real story is in the working capital trends. Management has made accelerating the cash cycle a top priority, and you can see the results. Days Sales Outstanding (DSOs)-the time it takes to collect money from customers-have been reduced into the lower-70s. They are proactively managing their order-to-cash cycle, which is a great sign of operational efficiency taking hold. This focus is what drives cash flow, and cash flow is king.

Looking at the cash flow statement overview for the year shows a clear trend of improvement. Operating cash flow (OCF) is the money generated from the core business, and it's been on a strong upward trajectory: Q1 2025 saw a use of cash of approximately $1.1 million, but this flipped to $3.9 million in Q2 2025, and then jumped to $5.7 million in Q3 2025. That quarter-over-quarter growth is what you want to see. For the trailing twelve months (TTM), Cash from Operations stood at $3.74 million.

The other cash flow sections tell a story of debt reduction and low capital expenditure. Cash from Investing Activities (CFI) for the TTM was $3.17 million, which includes proceeds from asset sales like the divested mall-related business, not just capital expenditures. On the financing side, Cash from Financing Activities (CFF) shows a clear commitment to de-risking the balance sheet. Quest Resource Holding Corporation reduced its debt by $4.6 million in Q3 2025 alone, bringing the year-to-date debt reduction to a significant $11.2 million.

While the company is still reporting a GAAP net loss of $(13.7) million year-to-date 2025, the underlying cash generation is a major strength that mitigates the risk. The biggest potential liquidity concern is less about the immediate ratios and more about maintaining the cash cycle improvements in a challenging industrial market. Still, the management team is showing they know how to generate cash and aggressively pay down debt, which is the right action to take right now. You can learn more about the institutional interest in the company here: Exploring Quest Resource Holding Corporation (QRHC) Investor Profile: Who's Buying and Why?

Here is a snapshot of the cash flow trends:

Valuation Analysis

You're looking at Quest Resource Holding Corporation (QRHC) and wondering if the recent stock price volatility means it's a bargain or a trap. Honestly, the valuation metrics suggest a mixed picture: the stock appears cheap on a book value basis, but its negative earnings and high Enterprise Value multiple signal a high-risk, high-reward turnaround play.

The market is defintely pricing in significant risk, which is why the stock has fallen so sharply. The question for you is whether you believe management can execute on their cost-saving plans to flip the earnings negative to positive in 2026, as some analysts forecast.

Is Quest Resource Holding Corporation (QRHC) Overvalued or Undervalued?

When we look at the core valuation ratios, Quest Resource Holding Corporation (QRHC) presents a classic case of a company in a restructuring or growth phase that hasn't yet delivered consistent profits. The current stock price, as of mid-November 2025, is around $1.61.

Here's the quick math on the key multiples:

• Price-to-Earnings (P/E): The trailing P/E ratio is negative, sitting around -1.39. This isn't a surprise; the company reported a GAAP net loss of $13.7 million for the first nine months of 2025. A negative P/E just means the company is currently losing money, so the ratio isn't useful for comparison.
• Price-to-Book (P/B): The trailing P/B ratio is approximately 0.80. Since this is below 1.0, it suggests the stock is trading for less than the value of its net assets (Shareholders' Equity) on the balance sheet. This is a common sign of a potentially undervalued stock, but only if you trust the book value.
• Enterprise Value-to-EBITDA (EV/EBITDA): The trailing EV/EBITDA is high at roughly 19.98. This multiple measures the total value of the company (market cap plus debt minus cash) against its operating cash flow proxy (Earnings Before Interest, Taxes, Depreciation, and Amortization). For a company in the environmental services sector, this is a relatively high multiple, showing the market is paying a premium for the underlying business operations, likely due to the high debt load of $68.41 million.

Stock Price Reality and Analyst Sentiment

The stock chart tells a story of extreme downward pressure. Over the last 12 months, Quest Resource Holding Corporation (QRHC) has seen its price plummet by about -74.58%. The 52-week range is stark, moving from a high of $7.40 to a low of $1.11. This kind of volatility means you need a strong stomach and conviction in the turnaround story.

On the income side, there's no help from dividends. Quest Resource Holding Corporation is a growth-focused company that does not pay a dividend. So, your return is entirely dependent on capital appreciation.

Wall Street analysts have a mixed but generally optimistic view, which is interesting given the price action. The consensus rating is a Moderate Buy, with an average brokerage recommendation (ABR) of 2.00 on a 1 (Strong Buy) to 5 (Strong Sell) scale. The average 12-month price target is around $3.08, implying a significant upside of over 90% from the current price. What this estimate hides is the execution risk required to hit those numbers.

For a deeper dive into the operational risks and opportunities underpinning this valuation, you should review the full analysis at Breaking Down Quest Resource Holding Corporation (QRHC) Financial Health: Key Insights for Investors.

Risk Factors

You need to see the full picture here: Quest Resource Holding Corporation (QRHC) is in a critical turnaround phase, but its financial and operational risks are significant, especially given the challenging macroeconomic environment in 2025. The core issue is a lack of sustained growth and a heavy debt load that is draining liquidity.

The company's year-to-date revenue through Q3 2025 fell to $191.3 million, a 12.5% decrease from the same period last year. This revenue slump, coupled with high costs, is the root of the problem. Honesty, the market has reacted violently, with the stock price falling almost 80% since late 2024 because those anticipated growth expectations just didn't materialize.

Operational and Financial Headwinds

The most immediate internal risk is the performance of the core business, particularly the industrial segment. This segment, one of QRHC's largest, saw a massive drop, generating $17 million in lost sales in the first half of 2025 alone. That's a near 100% increase in lost revenue from Q1 to Q2 in that segment. While management points to industry-wide weakness, the magnitude of this decline raises flags about company-specific execution.

The financial structure adds another layer of risk. The company carries a high debt-to-equity ratio of 144% and an annual interest expense of about $10 million. In the first half of 2025, the cash flow from operations (CFO) before working capital was a negative $1 million, meaning the business is barely generating enough cash to cover its interest payments. Liquidity is tight, with only $1.1 million in cash on hand at the end of Q3 2025.

• Industrial segment revenue fell sharply.
• High debt service limits financial flexibility.
• Pipeline conversion is slower than expected.

External and Strategic Challenges

Macroeconomic uncertainty is a major external risk. The current environment has led to subdued volumes from industrial customers, and it is slowing down the sales pipeline. This means sales cycles are extended, making it harder for QRHC to convert new business and reverse the year-to-date revenue decline. Plus, the environmental services industry is highly competitive, and the company is always exposed to commodity price fluctuations, which can erode margins quickly.

The strategic risk is simple: the company needs to sustain the onboarding of recent wins and convert its sales pipeline into recurring revenue. If onboarding takes 14+ days, churn risk rises. The GAAP net loss for the first nine months of 2025 widened to $(13.7) million, compared to a loss of $(5.6) million in the same period of 2024, showing the urgent need for a turnaround.

Mitigation and Actionable Insights

To be fair, management has taken decisive action to mitigate these risks. They divested the non-core mall waste segment, using the $5 million in proceeds to pay down debt. They also implemented cost-saving measures aimed at reducing Selling, General, and Administrative (SG&A) expenses by $3 million annually. Here's the quick math: they reduced debt by a total of $11.2 million year-to-date through Q3 2025. That's a solid step, but defintely not a cure-all.

What this estimate hides is the need for organic growth to return. Debt reduction is good, but without a clear, profitable growth path, the financial risk remains too high. You can dive deeper into the ownership structure and market sentiment by reading Exploring Quest Resource Holding Corporation (QRHC) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking at Quest Resource Holding Corporation (QRHC) and seeing a complex picture: a company in a high-growth sector but facing near-term profitability headwinds. The direct takeaway is this: Quest is in a necessary, painful pivot, moving from a revenue-chasing model to one focused on operational excellence and higher-margin business. This shift is the core of their future growth story.

The company's growth prospects aren't about a massive, sudden market expansion; they're about getting more efficient and deepening existing relationships. Management is driving a comprehensive 'operational excellence' program, which is defintely the right move. This initiative is designed to standardize processes and improve vendor performance, which has already led to the lowest service-disruption rates in company history.

Future Revenue and Earnings Estimates

The financial projections for 2025 show the company is still in a turnaround year. Consensus analyst estimates put Quest Resource Holding Corporation's full-year 2025 revenue at approximately $254.75 million. This figure reflects the impact of divesting the non-core RWS commercial property management business, a necessary move that sold for about $5 million in cash plus an earn-out in Q1 2025, allowing them to focus on the core portfolio.

Here's the quick math on profitability: Analysts expect a full-year 2025 earnings per share (EPS) loss of around -$0.58 per share. The good news is that this loss is projected to precede a shift to profitability, with some analysts forecasting a profit of $1.6 million in 2026. The company is aggressively cutting Selling, General, and Administrative (SG&A) costs, targeting approximately $9.5 million per quarter in the second half of 2025, which should help the bottom line.

Key Growth Drivers and Competitive Edge

The real engine for future growth is their 'share-of-wallet' strategy-getting more business from existing clients and expanding with new ones. New clients added over the past 18 months have already contributed over $24 million in incremental revenue year-over-year as of the third quarter of 2025. This land-and-expand model is working, even if overall industrial volumes are subdued due to macroeconomic conditions.

Quest Resource Holding Corporation's competitive advantage lies in its asset-light, process-agnostic approach. They don't own the landfills or the trucks; they manage the complex waste streams for large, multi-location national enterprises like major retailers and restaurant chains. This model gives them flexibility and a low capital requirement for growth. Plus, their focus on data and reporting is crucial for clients who need to meet increasingly stringent Environmental, Social, and Governance (ESG) goals.

• Product Innovations: Focus on tailored, single-source environmental solutions across 100+ waste streams.
• Market Expansions: Deepening penetration in sectors like automotive service, evidenced by the late 2024 partnership with Stonebriar Auto Services.
• Financial Focus: Year-to-date debt paydown of approximately $11.2 million through Q3 2025, freeing up capital for growth initiatives.

What this estimate hides is the risk of a prolonged industrial slowdown, which could continue to pressure volumes and margins on renewals. Still, the commitment to fixing the underlying business processes and reducing debt is a clear, positive signal for long-term investors. If you want a deeper dive into who is betting on this turnaround, you should read Exploring Quest Resource Holding Corporation (QRHC) Investor Profile: Who's Buying and Why?.

Next Step: Monitor the Q4 2025 earnings call for further details on new client rollout timelines and the sustained impact of the SG&A reduction program.