Company with a plant in Sderot published reports: why is the stock falling?

Top Gam, which produces dietary supplements in the form of gummy candies and has its plant in Sderot, published its results for the second quarter of 2026 today. On paper, this is an excellent quarter: record revenues of about $33.8 million, the tenth consecutive quarter of record revenue, and organic growth of about 50% without any contribution from acquisitions.

And yet, the line that caught investors’ attention is the red one: the company moved from a net profit of about $3 million last year to a loss of $1.1 million.

The dietary supplements segment, the core of the business, jumped by about 64% in organic growth to a record $29.3 million, accounting for about 87% of the group’s revenues. In the first half of the year, total revenues reached about $65.7 million—an increase of about 65% compared with the corresponding period. The order backlog in this field stands at a record $57 million, compared with $41 million a year earlier. These are the numbers of a growing company, not one in trouble.

Here lies the important point: the net loss does not stem from the business itself. Operating profit in the quarter was positive and stood at about $1 million. The shift to a loss was created mainly by a gap in net financing expenses between periods—a line item affected by currency exchange rates and interest, not by the company’s ability to sell. In other words, this is largely a “loss on paper,” not a sign of deterioration in sales or operating profitability.

Also, adjusted EBITDA, although it grew by about 26% to $4.4 million, saw its margin fall to 13% of revenues compared with 15.5% last year. The main reason: the quarter included for the first time the activity acquired in the US from P&L Developments, which contributed a negative $0.6 million at the integration stage. Excluding the acquisition, EBITDA actually jumped by 44% to $5.1 million, and its margin returned to 15%.

Beyond that, the company absorbed a series of external headwinds: a weakening of the dollar by about 18% against the shekel, which erodes a company with dollar revenues; American quotas on exports from Israel; one-time shipping costs due to the shutdown of the ports in Operation “Shaagat Arye”; and costs of moving to the new plant in Sderot. According to the company, after excluding all of these, the EBITDA margin would have been about 17.5%.

The loss looks bad at first glance, but its source is financing and temporary costs, while the operating engine is accelerating. The company repeats its estimate that the second half will reflect an annual sales run rate of over $145 million, and it expects the launch of a product in the Costco network.

The long-term target remains ambitious: over $250 million in dietary supplements with EBITDA of more than 20%. The real risk is not the quarterly loss, but whether the company will be able to translate the impressive growth into stable profitability even after the temporary noise subsides.

According to Eyal Shochat, CEO of Top Gam:

“The record-quarter results, including organic growth of about 50% across the company’s total activity and 64% in the dietary supplements segment, reflect the successful implementation of our growth strategy and our ability to execute it consistently. The focus on growing brands, alongside innovation, quality, and the development of unique products, continues to strengthen the trust of our customers and expand our activity base.

We see strong demand from both existing and new customers, and we are working to expand our production capacity in Israel and North America in order to meet the expected peak demand in the second half of this year. Even in a complex global environment, we continue to operate with a long-term perspective and clear confidence in the strategic direction we chose. We are convinced that the infrastructure, capabilities, and global presence we are building will enable Top Gam to continue growing and establishing its position as a leading company in its field.”