Hydrofarm Raises $8.3 Million and Retires $109 Million Loan in Share Deal

Hydrofarm Holdings Group, Inc. (Nasdaq: HYFM) sold stock and warrants for $8.3 million in gross proceeds and discharged about $109 million of loan debt in exchange for preferred stock, the company said in an 8-K filed Tuesday, Oct. 27, 2026.

Shares sold at 90.5 cents

Under a securities purchase agreement with institutional investors, the company sold 1,599,400 registered shares at $0.905 each, about $1.4 million, and issued 6,971,575 unregistered shares at the same price. It also sold pre-funded warrants for up to 640,000 shares at $0.9049 each. The closing took place Oct. 27.

Each investor also received common warrants equal to 100% of its shares, for an aggregate 9,210,975 shares at an exercise price of $0.78. The warrants expire 5.5 years after issuance. The stock's last close before the filing was $0.79 on Oct. 27.

Before the filing, the company's market value was about $3.8 million, so the $8.3 million in gross proceeds was roughly twice that figure. The company reported $6.2 million in cash and equivalents as of June 30, 2026, and said it will use the proceeds for general corporate purposes.

Loan exchanged for preferred stock

The filing also describes a payoff letter with lenders and FEAC Agent, LLC, which covers a credit agreement dated Oct. 25, 2021. The outstanding principal was about $109 million as of Sept. 30, 2026, excluding interest and fees. Under the payoff terms, the debt was discharged and related liens were released at closing.

In return, the lenders received 27.5 million shares of Series 1 Non-Voting Convertible Preferred Stock with a stated value of $1.00 per share, plus warrants to buy up to 27.5 million common shares at $0.78. The lender warrants become exercisable only after stockholder approval.

For scale, the company reported a net loss of $289.8 million for 2025. In the quarter ended June 30, 2026, revenue was $23.2 million, down 41% from a year earlier, and the net loss was $10.6 million, narrower than the $16.9 million loss in the same quarter of 2025.

Nasdaq equity deadline

Nasdaq had notified the company that it did not meet the $2.5 million minimum stockholders' equity requirement. A Nasdaq Hearings Panel extended the company's deadline to Oct. 27, 2026. The company said a pro forma condensed balance sheet, which it did not include in the filing, shows stockholders' equity above that minimum, and it believes it has regained compliance. The company said the Panel will continue to review its status and that there is no assurance the Panel will agree.

What happens next

The preferred stock converts only after stockholder approval under Nasdaq Rule 5635. The company agreed to file a preliminary proxy statement as promptly as practicable, mail a definitive proxy, and hold a meeting to seek that approval. After approval, lenders may designate one director, with up to three more added later, subject to Nasdaq rules.

The company agreed to file a resale registration statement on Form S-3 by the 15th calendar day after the registration rights agreement date and to seek effectiveness within 45 days of filing, or 75 days if the SEC conducts a full review. If it misses those deadlines, it may owe partial liquidated damages of 2.0% a month. Directors, executive officers and holders of 10% or more of the stock agreed to lock-ups of 120 days.

The placement agent, ThinkEquity LLC, receives a cash fee of 8% of the purchase price and warrants equal to 8% of the shares and pre-funded warrants sold, plus expenses of up to $125,000 for legal and diligence work. The company did not say how many shares will be outstanding once these transactions are complete.