NEW YORK, Oct. 22, 2025 (GLOBE NEWSWIRE) -- INNOVATE Corp. (NYSE: VATE) (“INNOVATE” or the “Company”) announced today that it will release its financial results for the third quarter 2025 on Wednesday, November 12, 2025, after market close. The Company will host an earnings conference call reviewing these results, its operations and strategy on the same day, beginning at 4:30 p.m. ET. Dial-in instructions for the conference call and the replay are outlined below. This conference call will also be broadcast ...

Core Viewpoint - MediBeacon's Transdermal GFR System (TGFR) has received approval in China, marking a significant advancement in kidney function assessment technology, which is expected to improve patient management in chronic kidney disease (CKD) [1][4][5]. Company Overview - INNOVATE Corp. is the parent company of MediBeacon, focusing on medical technology and has a commitment to expanding access to innovative healthcare solutions globally [8]. - MediBeacon specializes in fluorescent tracer agents and their transdermal detection, holding over 60 U.S. patents and more than 245 patents worldwide [9][10]. Product Details - The TGFR system includes Lumitrace (relmapirazin) injection, MediBeacon TGFR Monitor, and MediBeacon TGFR Sensor, which together facilitate the assessment of kidney function by measuring the clearance rate of the fluorescent agent [2][12]. - Lumitrace is a non-radioactive, non-iodinated compound designed for effective kidney function measurement without interference from medications or demographic factors [11][7]. Market Opportunity - Chronic Kidney Disease (CKD) affects approximately 11% of the 1.4 billion population in China, presenting a substantial market opportunity for the TGFR system [3]. - The approval of the TGFR system in China is seen as a major step in enhancing access to kidney health management tools [5]. Clinical Implications - The TGFR system aims to provide a more accurate and immediate assessment of kidney function compared to traditional methods, which can be influenced by various non-renal factors [5][6]. - The technology is expected to transform kidney disease management by allowing real-time assessment at the point of care, potentially improving patient outcomes [7].

Core Insights - R2 Technologies, a subsidiary of INNOVATE Corp., reported a significant revenue increase of 88% in Q2 2025 compared to Q2 2024, highlighting its strong performance in the global aesthetics market [1][2] Financial Performance - R2's global system sales surged by 125% year-over-year, driven by demand in North America and expansion into Europe, South America, and Asia [2] - Outside of North America, demand grew by an impressive 768% for the first half of 2025 compared to the same period in 2024 [2] Clinical & Business Impact - Glacial Skin technology demonstrated a 115% increase in patient treatments in Q2 2025, with average monthly utilization per provider rising by 28% year-over-year [3] - The technology provides controlled cooling to reduce inflammation and improve skin appearance, contributing to both patient satisfaction and revenue growth [3] Brand Awareness & Digital Engagement - Glacial Skin has seen a remarkable increase in brand awareness and digital engagement, with social media engagement outperforming industry benchmarks by 823% [4] - There was a 52% quarter-over-quarter growth in social media mentions and a 141% increase in website traffic, indicating strong sales performance and market share gains [4] Market Outlook - The global non-invasive aesthetic market is projected to grow from USD 83.13 billion in 2025 to USD 238 billion by 2034, reflecting a compound annual growth rate (CAGR) of 12.4% [6] - The skin rejuvenation segment is expected to reach nearly USD 39 billion by 2035, emphasizing the increasing demand for effective skin health treatments [6] Strategic Positioning - R2 Technologies' new tagline "Restore, Refresh, Rebalance" encapsulates the wellness benefits of Glacial Skin treatments, positioning the company for continued growth in the aesthetic wellness technology sector [5] - The company aims to meet the growing consumer demand for non-invasive treatments that deliver visible results with minimal downtime [7]

Financial Data and Key Metrics Changes - Consolidated revenues for the second quarter of 2025 were $242 million, a decrease of 22.7% compared to $313.1 million in the prior year period [15] - Adjusted EBITDA for the second quarter was $15.7 million, down from $26.7 million in the prior year [16] - Net loss attributable to common stockholders was $22 million, or $1.67 per fully diluted share, compared to net income of $14.1 million, or $1.03 per fully diluted share in the prior year [15][16] Business Line Data and Key Metrics Changes Infrastructure - Revenue decreased by 23.6% to $233.1 million from $305.2 million in the prior year quarter [16] - Adjusted EBITDA decreased to $19.3 million from $32.5 million in the prior year [16] - Gross margin compression of approximately 230 basis points to 17.9% and adjusted EBITDA margin compression of approximately 240 basis points to 8.3% year over year [6] Life Sciences - Revenue increased by 88.2% to $3.2 million from $1.7 million in the prior year quarter, primarily driven by R2's increased sales [18] - Adjusted EBITDA losses decreased due to a reduction in equity method losses from MediBeacon [18] Spectrum - Revenue decreased by $500,000 to $5.7 million, and adjusted EBITDA decreased by $500,000 to $1 million [18] Market Data and Key Metrics Changes - DBM Global's adjusted backlog increased year over year by approximately $300 million to just over $1.3 billion [6] - R2's backlog now carries approximately 50 units globally, positioning the company for continued growth [10] Company Strategy and Development Direction - The company is focused on executing strategic plans, including refinancing transactions to extend debt maturities [5][20] - The company is exploring commercial applications of broadcast data technology, particularly in gaming, entertainment, healthcare, and automotive sectors [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding DBM's positioning and backlog despite challenges such as fluctuating tariffs and inflationary pressures [7][8] - The outlook for the fourth quarter of 2025 appears promising, particularly in the Spectrum segment as ad sales softness is expected to improve [12] Other Important Information - The company had $33.4 million in cash and cash equivalents as of June 30, 2025, down from $48.8 million at the end of 2024 [19] - The company announced early settlement of indebtedness refinancing transactions, allowing for extended debt maturities [20] Q&A Session Summary Question: No questions were asked during the Q&A session - There were no questions in the queue, and the call concluded without any inquiries from participants [23]

Financial Performance - INNOVATE Corp's Q2 2025 consolidated revenue was $242 million[16], a decrease of $71.1 million or 22.7% compared to Q2 2024[21] - The company reported a net loss attributable to INNOVATE Corp of $198 million in Q2 2025[17] - Adjusted EBITDA for Q2 2025 was $157 million[20], a decrease of $11 million compared to Q2 2024[21] Segment Performance - Infrastructure (DBMG) - Infrastructure segment revenue decreased to $2331 million in Q2 2025 from $3052 million in Q2 2024[16], a 236% decrease[25] - Infrastructure segment's adjusted EBITDA decreased by $132 million year-over-year[21] to $193 million[17] - DBMG's adjusted backlog remained strong at $13 billion in Q2 2025[12] Segment Performance - Life Sciences (R2 Technologies) - Life Sciences segment revenue increased to $32 million in Q2 2025 from $17 million in Q2 2024[16], an 882% increase[12, 21] - R2 Technologies experienced gross system unit sales growth of 1245% over the prior year quarter worldwide[30] Segment Performance - Spectrum - Spectrum segment revenue decreased to $57 million in Q2 2025 from $62 million in Q2 2024[16] - Spectrum segment reported adjusted EBITDA of $10 million in Q2 2025[12, 17] Debt and Refinancing - On August 4, 2025, INNOVATE closed a series of indebtedness refinancing transactions[12] - Total principal outstanding debt as of June 2025 was $6413 million[35]

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for INNOVATE Corp [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents INNOVATE Corp.'s unaudited condensed consolidated financial statements and related notes for periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) INNOVATE Corp. reported a net loss of **$21.0 million** for the three months and **$46.8 million** for the six months ended June 30, 2025, with revenue declines Condensed Consolidated Statements of Operations (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $242.0 | $313.1 | $516.2 | $628.3 | | Gross profit | $45.6 | $65.6 | $91.1 | $114.2 | | Income from operations | $4.9 | $28.8 | $8.3 | $31.6 | | Net (loss) income | $(21.0) | $13.9 | $(46.8) | $(6.2) | | Basic EPS | $(1.67) | $1.11 | $(3.56) | $(0.35) | | Diluted EPS | $(1.67) | $1.03 | $(3.56) | $(0.35) | [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) The company reported a comprehensive loss of **$20.1 million** for three months and **$45.7 million** for six months ended June 30, 2025 Condensed Consolidated Statements of Comprehensive (Loss) Income (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(21.0) | $13.9 | $(46.8) | $(6.2) | | Other comprehensive income (loss) | $0.9 | $0.4 | $1.1 | $(0.7) | | Comprehensive (loss) income | $(20.1) | $14.3 | $(45.7) | $(6.9) | | Comprehensive (loss) income attributable to INNOVATE Corp. | $(19.0) | $14.8 | $(43.3) | $(3.6) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$890.9 million**, with current liabilities increasing to **$873.1 million** and stockholders' deficit reaching **$206.4 million** Condensed Consolidated Balance Sheets (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Total current assets | $398.4 | $390.9 | | Total assets | $890.9 | $891.1 | | Total current liabilities | $873.1 | $483.0 | | Total liabilities | $1,080.2 | $1,034.8 | | Total stockholders' deficit | $(206.4) | $(159.3) | - Current portion of debt obligations increased significantly from **$162.2 million** as of December 31, 2024, to **$477.5 million** as of June 30, 2025[15](index=15&type=chunk) - Contract liabilities increased from **$109.1 million** as of December 31, 2024, to **$172.8 million** as of June 30, 2025[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit) Total stockholders' deficit increased to **$206.4 million** as of June 30, 2025, due to a **$44.3 million** net loss and **$2.5 million** in preferred dividends Condensed Consolidated Statements of Stockholders' Deficit (in millions) | Metric (in millions) | Balance as of December 31, 2024 | Balance as of June 30, 2025 | | :------------------- | :------------------------------ | :-------------------------- | | Total temporary equity | $15.6 | $17.1 | | Total INNOVATE Corp. stockholders' deficit | $(180.4) | $(224.8) | | Total stockholders' deficit | $(159.3) | $(206.4) | - Net loss attributable to INNOVATE Corp. for the six months ended June 30, 2025, was **$44.3 million**[17](index=17&type=chunk) - Preferred dividends for the six months ended June 30, 2025, totaled **$2.5 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash from operations improved to **$26.3 million** for six months ended June 30, 2025, with increased cash used in investing and financing activities Condensed Consolidated Statements of Cash Flows (in millions) | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Cash provided by (used in) operating activities | $26.3 | $(3.9) | | Cash used in investing activities | $(10.2) | $(0.7) | | Cash (used in) provided by financing activities | $(32.2) | $4.6 | | Net decrease in cash and cash equivalents, including restricted cash | $(15.3) | $(0.6) | | Cash, cash equivalents and restricted cash, end of period | $34.0 | $81.7 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes detail INNOVATE Corp.'s financial statements, covering accounting policies, revenue, debt, equity, and recent debt refinancing and MediBeacon FDA approval [(1) Organization and Business](index=9&type=section&id=(1)%20Organization%20and%20Business) INNOVATE Corp. is a diversified holding company with Infrastructure, Life Sciences, and Spectrum segments, focused on long-term free cash flow - INNOVATE Corp. is a diversified holding company with three reportable segments: Infrastructure, Life Sciences, and Spectrum[25](index=25&type=chunk)[26](index=26&type=chunk) - The Infrastructure segment (DBMG) provides industrial construction, structural steel, and facility maintenance services, with INNOVATE holding a **91.2%** controlling interest[27](index=27&type=chunk) - The Life Sciences segment (Pansend) invests in healthcare companies, holding controlling interests in Genovel Orthopedics (**80.0%**) and R2 Technologies (**81.0%**), and significant interests in MediBeacon (**44.7%**) and Scaled Cell Solutions (**20.1%**)[28](index=28&type=chunk) - The Spectrum segment (Broadcasting) acquires and operates over-the-air broadcasting stations, with INNOVATE maintaining a **98.0%** controlling interest[29](index=29&type=chunk) [(2) Summary of Significant Accounting Policies](index=9&type=section&id=(2)%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements reflect a 1-for-10 reverse stock split and substantial doubt about going concern due to debt maturities, with management exploring mitigation - The financial statements have been retroactively adjusted to reflect a **1-for-10** reverse stock split effected on August 8, 2024[34](index=34&type=chunk) - There is substantial doubt about the Company's ability to continue as a going concern within one year due to upcoming debt maturities (R2 Technologies) and cross-default provisions in Senior Secured Notes[35](index=35&type=chunk)[36](index=36&type=chunk) - Management plans to alleviate going concern conditions through asset sales, debt refinancing at corporate and subsidiary levels, and raising additional capital, but there's no assurance of success[38](index=38&type=chunk) [(3) Revenue and Contracts in Process](index=12&type=section&id=(3)%20Revenue%20and%20Contracts%20in%20Process) Total revenue decreased to **$242.0 million** (three months) and **$516.2 million** (six months) due to Infrastructure, with contract liabilities increasing Revenue by Segment (in millions) | Segment (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Infrastructure | $233.1 | $305.2 | $498.0 | $613.1 | | Life Sciences | $3.2 | $1.7 | $6.3 | $2.7 | | Spectrum | $5.7 | $6.2 | $11.9 | $12.5 | | Total revenue | $242.0 | $313.1 | $516.2 | $628.3 | Contract Assets and Liabilities (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Contract assets | $83.0 | $106.3 | | Contract liabilities | $(172.8) | $(109.1) | - Remaining unsatisfied performance obligations totaled **$1,242.2 million** as of June 30, 2025, with **$1,065.3 million** expected within one year[53](index=53&type=chunk) [(4) Accounts Receivable, Net](index=15&type=section&id=(4)%20Accounts%20Receivable,%20Net) Accounts receivable, net, increased to **$242.7 million** as of June 30, 2025, driven by higher contracts in progress in the Infrastructure segment Accounts Receivable, Net (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Contracts in progress | $237.3 | $184.9 | | Trade receivables | $3.6 | $3.3 | | Total | $242.7 | $194.0 | [(5) Inventory](index=15&type=section&id=(5)%20Inventory) Total inventory remained stable at **$20.7 million** as of June 30, 2025, with raw materials and consumables as the largest component Inventory (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Raw materials and consumables | $18.9 | $19.6 | | Work in process | $0.8 | $0.4 | | Finished goods | $1.0 | $0.8 | | Total inventory | $20.7 | $20.8 | [(6) Investments](index=15&type=section&id=(6)%20Investments) Total investments increased to **$4.4 million** as of June 30, 2025, driven by marketable securities and a step-up gain from MediBeacon's FDA approval Investments by Category (in millions) | Investment Category (in millions) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Equity Method | $0.9 | $0.9 | | Fair Value | $2.6 | $1.8 | | Measurement Alternative | $0.9 | $0.9 | | Total | $4.4 | $3.6 | - MediBeacon received FDA approval for its Transdermal GFR Measurement System (TGFR) on January 17, 2025[64](index=64&type=chunk) - Pansend recognized a **$4.4 million** step-up gain on its MediBeacon investment due to FDA approval and a **$7.5 million** milestone payment from Huadong, leading to a decrease in Pansend's ownership from **45.9%** to **44.7%**[64](index=64&type=chunk) [(7) Property, Plant and Equipment, Net](index=17&type=section&id=(7)%20Property,%20Plant%20and%20Equipment,%20Net) Net property, plant and equipment decreased slightly to **$132.1 million** as of June 30, 2025, reflecting depreciation, construction, and assets held-for-sale Property, Plant and Equipment, Net (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Total gross PP&E | $290.8 | $281.8 | | Accumulated depreciation | $158.7 | $148.2 | | Total net PP&E | $132.1 | $133.6 | - Depreciation expense for the six months ended June 30, 2025, was **$11.4 million**, including **$6.5 million** recognized in cost of revenue[68](index=68&type=chunk) - Assets held-for-sale totaled **$6.0 million** as of June 30, 2025, primarily consisting of a building, equipment, and land in the Infrastructure segment[70](index=70&type=chunk) [(8) Goodwill and Intangibles, Net](index=18&type=section&id=(8)%20Goodwill%20and%20Intangibles,%20Net) Goodwill increased slightly to **$126.9 million**, while definite-lived intangible assets, net, decreased to **$60.9 million** due to amortization Goodwill and Intangibles, Net (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Goodwill | $126.9 | $126.7 | | Indefinite-lived intangible assets (FCC licenses) | $107.7 | $107.7 | | Definite-lived intangible assets, net | $60.9 | $64.7 | - Amortization expense for definite-lived intangible assets was **$3.9 million** for the six months ended June 30, 2025[73](index=73&type=chunk) [(9) Leases](index=18&type=section&id=(9)%20Leases) Right-of-use assets decreased to **$50.2 million** and lease liabilities to **$52.5 million**, with a **$7.7 million** gain on lease modification in the prior year Right-of-Use Assets and Lease Liabilities (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Total right-of-use assets | $50.2 | $54.2 | | Total lease liabilities | $52.5 | $57.0 | Lease Cost (in millions) | Lease Cost (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :----------------------------- | :----------------------------- | | Total non-current lease cost | $9.3 | $9.0 | | Short-term lease costs | $15.5 | $15.2 | | Total lease cost | $24.8 | $24.2 | - A **$7.7 million** gain on lease modification was recognized for the six months ended June 30, 2024, due to early termination of three property leases by a DBMG subsidiary[77](index=77&type=chunk) [(10) Other Assets, Accrued Liabilities and Other Liabilities](index=20&type=section&id=(10)%20Other%20Assets,%20Accrued%20Liabilities%20and%20Other%20Liabilities) Other current assets decreased to **$18.6 million**, accrued liabilities increased to **$125.4 million**, and other non-current liabilities decreased to **$42.5 million** Other Assets and Liabilities (in millions) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Other current assets | $18.6 | $21.0 | | Other assets (non-current) | $58.9 | $62.3 | | Accrued liabilities | $125.4 | $109.7 | | Other current liabilities | $17.2 | $17.2 | | Other liabilities (non-current) | $42.5 | $46.8 | - Accrued interest and exit fees (current portion) increased from **$61.0 million** to **$74.0 million**[80](index=80&type=chunk) - Accrued income taxes increased from **$0.8 million** to **$9.9 million**[80](index=80&type=chunk) [(11) Debt Obligations](index=23&type=section&id=(11)%20Debt%20Obligations) Total outstanding principal debt decreased to **$641.3 million**, but current portion increased to **$477.5 million**, with subsequent refinancing extending maturities Debt Obligations by Segment (in millions) | Segment (in millions) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Infrastructure | $115.2 | $144.7 | | Spectrum | $69.7 | $69.7 | | Life Sciences | $26.5 | $24.0 | | Non-Operating Corporate | $429.9 | $429.9 | | Total outstanding principal | $641.3 | $668.3 | | Current portion of debt obligations | $477.5 | $162.2 | - Subsequent to quarter-end (August 4, 2025), the company closed a series of indebtedness refinancing transactions to extend debt maturities for its senior secured notes, convertible senior notes, revolving credit agreement, CGIC note, Spectrum debt, and R2 Technologies debt[84](index=84&type=chunk)[183](index=183&type=chunk) - The Infrastructure segment (DBMG) entered into a new **$220.0 million** credit agreement maturing May 20, 2030, to refinance existing debt and provide working capital[88](index=88&type=chunk) - R2 Technologies' **20%** note with Lancer Capital was extended to August 1, 2025, with additional exit fees and a potential **$5.0 million** default fee if not repaid[100](index=100&type=chunk) [(12) Income Taxes](index=28&type=section&id=(12)%20Income%20Taxes) Income tax expense increased to **$4.2 million** (three months) and **$11.3 million** (six months) due to pre-tax results and NOL limitations Income Tax (Expense) Benefit (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax (expense) benefit | $(4.2) | $2.5 | $(11.3) | $(0.8) | - The increase in tax expense is primarily due to the impact of projected pre-tax results on the annual effective tax rate and limitations on NOL utilization by INNOVATE's U.S. consolidated group[115](index=115&type=chunk) - As of December 31, 2024, the company had gross U.S. NOL carryforwards of **$174.3 million** for the consolidated group and **$149.4 million** from subsidiaries not included in the consolidated return[117](index=117&type=chunk)[118](index=118&type=chunk) [(13) Commitments and Contingencies](index=29&type=section&id=(13)%20Commitments%20and%20Contingencies) The company faces various legal proceedings and claims, with **$406.1 million** in outstanding performance bonds as of June 30, 2025 - The company is subject to claims and legal proceedings, including a lawsuit against its subsidiary Schuff Steel Company regarding alleged failures in a hospital construction project[123](index=123&type=chunk)[125](index=125&type=chunk) - DBMG had outstanding performance bonds of **$406.1 million** as of June 30, 2025, significantly up from **$183.9 million** at December 31, 2024[126](index=126&type=chunk) Revenue Concentration by Customer (in millions) | Customer | Segment | Three Months Ended June 30, 2025 Revenue Concentration | Three Months Ended June 30, 2024 Revenue Concentration | Six Months Ended June 30, 2025 Revenue Concentration | Six Months Ended June 30, 2024 Revenue Concentration | | :--------- | :------------- | :---------------------------------------------------- | :---------------------------------------------------- | :--------------------------------------------------- | :--------------------------------------------------- | | Customer A | Infrastructure | * | 12.7% | * | 20.2% | | Customer B | Infrastructure | * | 10.7% | * | * | | Customer C | Infrastructure | 12.2% | * | 10.6% | * | [(14) Share-Based Compensation](index=30&type=section&id=(14)%20Share-Based%20Compensation) Share-based compensation expense was **$0.7 million** (three months) and **$1.5 million** (six months), with **$1.0 million** unrecognized as of June 30, 2025 Share-Based Compensation Expense (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Share-based compensation expense | $0.7 | $0.4 | $1.5 | $0.8 | - As of June 30, 2025, total unrecognized share-based compensation expense related to unvested restricted stock and units was **$1.0 million**, to be recognized over a weighted-average period of **1.3 years**[130](index=130&type=chunk) - As of June 30, 2025, there were **100,000** unvested stock options with **$0.1 million** of unrecognized expense, expected to be recognized over **0.2 years**[131](index=131&type=chunk) [(15) Equity and Temporary Equity](index=31&type=section&id=(15)%20Equity%20and%20Temporary%20Equity) The company's equity structure includes common and preferred stock, with a 1-for-10 reverse stock split and **$2.2 million** in preferred dividends - A **1-for-10** reverse stock split was effected on August 8, 2024, to regain compliance with NYSE minimum bid price requirements[133](index=133&type=chunk) - Preferred dividends of **$2.2 million** were recorded for the three months ended June 30, 2025, including **$1.9 million** in accretion of additional dividends due to the common stock's VWAP falling below a certain threshold[139](index=139&type=chunk) - R2 Technologies' total liquidation preference was **$149.1 million** as of June 30, 2025, but it had negative net assets, meaning no funds would be legally available to satisfy these preferences upon a hypothetical liquidation[156](index=156&type=chunk) [(16) Related Parties](index=35&type=section&id=(16)%20Related%20Parties) Related party transactions involve Lancer Capital, CGIC, and R2 Technologies' dealings with Huadong and Blossom Innovations - Lancer Capital, controlled by Chairman Avram A. Glazer, increased its beneficial ownership to **51.0%** as of June 30, 2025, following a rights offering and private placement in 2024[157](index=157&type=chunk) - Lancer Capital holds **$2.0 million** in principal amount of the company's **7.50% 2026** Convertible Notes[158](index=158&type=chunk) - R2 Technologies recognized **$1.0 million** in revenue from Huadong (a related party) for the three months ended June 30, 2025, and incurred **$0.2 million** in share-based compensation and royalty expenses related to Blossom Innovations (an investor)[162](index=162&type=chunk)[163](index=163&type=chunk) [(17) Operating Segments and Related Information](index=37&type=section&id=(17)%20Operating%20Segments%20and%20Related%20Information) The company operates through Infrastructure, Life Sciences, and Spectrum segments, with the Interim CEO monitoring performance via income (loss) from operations - The company has three reportable operating segments: Infrastructure, Life Sciences, and Spectrum, plus an 'Other' segment and a Non-Operating Corporate segment[165](index=165&type=chunk) - The Interim CEO, Paul Voigt, is the CODM and uses income (loss) from operations as the primary metric to assess segment performance and allocate resources[166](index=166&type=chunk) Income (Loss) from Operations by Segment (in millions) | Segment (in millions) | Three Months Ended June 30, 2025 Income (Loss) from Operations | Six Months Ended June 30, 2025 Income (Loss) from Operations | | :-------------------- | :------------------------------------------------------------- | :----------------------------------------------------------- | | Infrastructure | $10.6 | $19.7 | | Life Sciences | $(2.8) | $(5.8) | | Spectrum | $(0.3) | $(0.1) | | Non-Operating Corporate | $(2.6) | $(5.5) | | Total INNOVATE | $4.9 | $8.3 | [(18) Basic and Diluted (Loss) Income Per Common Share](index=39&type=section&id=(18)%20Basic%20and%20Diluted%20(Loss)%20Income%20Per%20Common%20Share) Basic and diluted loss per common share was **$(1.67)** (three months) and **$(3.56)** (six months), with anti-dilutive equivalents excluded Basic and Diluted (Loss) Income Per Common Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $(1.67) | $1.11 | $(3.56) | $(0.35) | | Diluted EPS | $(1.67) | $1.03 | $(3.56) | $(0.35) | - Weighted-average common shares outstanding (basic) for the three and six months ended June 30, 2025, were **13,146,750** and **13,130,930**, respectively[176](index=176&type=chunk) - No dilutive common stock equivalents were included in EPS calculations for the three and six months ended June 30, 2025, due to net losses making their inclusion anti-dilutive[174](index=174&type=chunk) [(19) Fair Value of Financial Instruments](index=41&type=section&id=(19)%20Fair%20Value%20of%20Financial%20Instruments) Fair value of debt obligations used Level 2 inputs, while marketable securities used Level 1 inputs (publicly available quoted market prices) Fair Value of Financial Instruments (in millions) | Metric (in millions) | June 30, 2025 Carrying Value | June 30, 2025 Estimated Fair Value | December 31, 2024 Carrying Value | December 31, 2024 Estimated Fair Value | | :------------------- | :----------------------------- | :--------------------------------- | :------------------------------- | :--------------------------------- | | Measurement alternative investment | $0.9 | $0.9 | $0.9 | $0.9 | | Debt obligations | $637.4 | $573.0 | $662.2 | $577.1 | - Fair value of debt obligations is determined using Level 2 fair value measurements, combining externally quoted market prices for certain notes and quantitative pricing models for others[179](index=179&type=chunk) - Investments in marketable securities are measured at fair value using Level 1 inputs (publicly available quoted market prices)[180](index=180&type=chunk) [(20) Supplementary Financial Information](index=42&type=section&id=(20)%20Supplementary%20Financial%20Information) Other (expense) income, net, was **$3.7 million** for six months, driven by a **$4.4 million** gain on equity investment step-up, with increased cash paid for interest and taxes Total Other (Expense) Income, Net (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total other (expense) income, net | $(0.3) | $0.2 | $3.7 | $(1.0) | - A **$4.4 million** gain on step-up of equity method investment was recognized for the six months ended June 30, 2025[181](index=181&type=chunk) Supplemental Cash Flow Information (in millions) | Supplemental Cash Flow Information (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------- | :----------------------------- | :----------------------------- | | Cash paid for interest | $23.8 | $22.7 | | Cash paid for income taxes (proceeds from tax refunds), net | $3.6 | $0.6 | [(21) Subsequent Events](index=42&type=section&id=(21)%20Subsequent%20Events) Subsequent to quarter-end, INNOVATE Corp. completed debt refinancing on August 4, 2025, extending maturities for various corporate and subsidiary debts - On August 4, 2025, the company closed a series of indebtedness refinancing transactions to extend debt maturities[183](index=183&type=chunk) - Existing Senior Secured Notes were exchanged for new **10.50%** Senior Secured Notes due February 1, 2027, with initial interest paid in kind[184](index=184&type=chunk)[187](index=187&type=chunk) - Existing Convertible Notes were exchanged for new **9.5%** Convertible Senior Secured Notes due March 1, 2027, with initial interest paid in kind[197](index=197&type=chunk)[201](index=201&type=chunk) - The Revolving Credit Agreement was extended to September 15, 2026, the CGIC Unsecured Note was extended to April 30, 2027 (with **8,063** Series A-4 Preferred Stock exchanged for **$43.0 million** principal), Spectrum debt was extended to September 30, 2026, and R2 Technologies debt was extended to August 1, 2026[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, highlighting revenue and net income declines, debt refinancing, going concern status, and segment performance [Our Business and Our Operations](index=47&type=section&id=Our%20Business%20and%20Our%20Operations) INNOVATE Corp. is a diversified holding company with Infrastructure, Life Sciences, and Spectrum segments, focused on sustainable free cash flow - INNOVATE Corp. is a diversified holding company with principal operations in Infrastructure (DBMG), Life Sciences (Pansend), and Spectrum segments[217](index=217&type=chunk) - The company aims to grow its businesses to generate long-term sustainable free cash flow and attractive returns[25](index=25&type=chunk) [Cyclical Patterns](index=47&type=section&id=Cyclical%20Patterns) Infrastructure segment operations are highly cyclical, subject to fluctuations from project delays, weather, customer spending, interest rates, and regulations - Operations in the Infrastructure segment are highly cyclical and can be affected by declines or delays in projects, varying by geographic region[219](index=219&type=chunk) - Factors causing fluctuations include weather, project site conditions, customer spending, interest rates, inflation, and regulatory/economic conditions[221](index=221&type=chunk) [Recent Developments](index=47&type=section&id=Recent%20Developments) The company is evaluating strategic alternatives and completed significant debt refinancing on August 4, 2025, extending maturities for corporate and subsidiary debts - The company continually evaluates strategic and business alternatives, including asset sales, with proceeds intended to address its capital structure[223](index=223&type=chunk) - Subsequent to quarter-end (August 4, 2025), a series of indebtedness refinancing transactions were closed, extending maturities for senior secured notes, convertible senior notes, revolving credit agreement, CGIC note, Spectrum debt, and R2 Technologies debt[226](index=226&type=chunk) - MediBeacon received FDA approval for its Transdermal GFR Measurement System (TGFR) on January 17, 2025, leading to the conversion of Pansend's convertible notes and a **$4.4 million** step-up gain[237](index=237&type=chunk) [Financial Presentation Background](index=50&type=section&id=Financial%20Presentation%20Background) This section compares the company's results of operations for the three and six months ended June 30, 2025, against 2024, per U.S. GAAP and SEC rules - The discussion compares results of operations for the three and six months ended June 30, 2025, to the same periods in 2024, adhering to U.S. GAAP and SEC disclosure rules[238](index=238&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) Overall revenue decreased by **$71.1 million** (three months) and **$112.1 million** (six months), with net loss widening, driven by Infrastructure and increased interest Key Financial Metrics (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $242.0 | $313.1 | $516.2 | $628.3 | | Total income from operations | $4.9 | $28.8 | $8.3 | $31.6 | | Interest expense | $(21.4) | $(16.5) | $(41.6) | $(33.7) | | Net (loss) income attributable to INNOVATE Corp. | $(19.8) | $14.4 | $(44.3) | $(3.0) | - Revenue decrease was primarily driven by the Infrastructure segment due to project timing and size, and to a lesser extent, the Spectrum segment[239](index=239&type=chunk)[240](index=240&type=chunk) - Interest expense increased due to higher exit fees and outstanding principal balance at Life Sciences, and increased interest rates at Infrastructure[243](index=243&type=chunk) - Loss from equity investees increased for the six-month period due to a **$5.9 million** increase in recognized losses from MediBeacon, following a **$4.4 million** step-up gain and **$1.5 million** from convertible note interest conversion[245](index=245&type=chunk) [Segment Results of Operations](index=53&type=section&id=Segment%20Results%20of%20Operations) Infrastructure revenue and income decreased, Life Sciences revenue grew with losses, Spectrum revenue declined, and Non-Operating Corporate improved operating loss [Infrastructure Segment](index=53&type=section&id=Infrastructure%20Segment) Infrastructure segment revenue decreased by **$72.1 million** (three months) and **$115.1 million** (six months) due to project timing, with income also declining Infrastructure Segment Performance (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $233.1 | $305.2 | $498.0 | $613.1 | | Income from operations | $10.6 | $35.5 | $19.7 | $44.8 | - Revenue decrease was driven by project timing and size at Banker Steel and the industrial maintenance and repair business[251](index=251&type=chunk)[252](index=252&type=chunk) - Other operating loss increased by **$11.7 million** (three months) and **$10.0 million** (six months) due to unrepeated gains on lease modifications and asset sales in the prior year, and current period losses[258](index=258&type=chunk) [Life Sciences Segment](index=54&type=section&id=Life%20Sciences%20Segment) Life Sciences revenue increased by **$1.5 million** (three months) and **$3.6 million** (six months) driven by R2 Technologies, but reported operating losses Life Sciences Segment Performance (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $3.2 | $1.7 | $6.3 | $2.7 | | Loss from operations | $(2.8) | $(4.0) | $(5.8) | $(7.2) | - Revenue increase was attributable to R2 Technologies, driven by increases in Glacial Spa unit sales, consumable sales, and Glacial fx unit sales both in and outside North America[259](index=259&type=chunk)[260](index=260&type=chunk) - Cost of revenue increased due to higher unit and consumable sales, and related warranty/royalty/freight costs, partially offset by changes in product mix[261](index=261&type=chunk) [Spectrum Segment](index=56&type=section&id=Spectrum%20Segment) Spectrum segment revenue decreased by **$0.5 million** (three months) and **$0.6 million** (six months) due to customer losses and reduced advertising Spectrum Segment Performance (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $5.7 | $6.2 | $11.9 | $12.5 | | (Loss) income from operations | $(0.3) | $0.1 | $(0.1) | $0.3 | - Revenue decreases were primarily driven by the loss of certain customers and a decrease in direct response advertising, partially offset by the launch of new networks[265](index=265&type=chunk) [Non-Operating Corporate](index=56&type=section&id=Non-Operating%20Corporate) Non-Operating Corporate's loss from operations decreased by **$0.2 million** (three months) and **$0.8 million** (six months) due to lower legal fees Non-Operating Corporate Performance (in millions) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Loss from operations | $(2.6) | $(2.8) | $(5.5) | $(6.3) | - Selling, general and administrative expenses decreased primarily due to lower legal fees from settled matters and slight decreases in other employee-related, accounting, and insurance expenses[269](index=269&type=chunk) [Loss from Equity Investees](index=57&type=section&id=Loss%20from%20Equity%20Investees) Loss from equity investees was zero for three months, but increased to **$5.9 million** for six months, driven by MediBeacon's FDA approval Loss from Equity Investees by Segment (in millions) | Segment (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Life Sciences | $0.0 | $(1.1) | $(5.9) | $(2.3) | - For the three months ended June 30, 2025, Pansend recognized no losses from MediBeacon as its carrying amount was zero[272](index=272&type=chunk) - For the six months ended June 30, 2025, the increase in loss was due to a **$5.9 million** increase in Pansend's basis in MediBeacon (from a **$4.4 million** step-up gain and **$1.5 million** from converted accrued interest), allowing recognition of previously unrecognized equity method losses[273](index=273&type=chunk) [Non-GAAP Financial Measures and Other Information](index=57&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Other%20Information) Adjusted EBITDA, a non-GAAP measure, decreased by **$11.0 million** (three months) and **$16.6 million** (six months) year-over-year, driven by Infrastructure [Adjusted EBITDA](index=57&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA decreased to **$15.7 million** (three months) and **$22.9 million** (six months), primarily due to lower revenue and gross margins in Infrastructure - Adjusted EBITDA is a non-GAAP measure used by management to provide insight into operating trends and facilitate peer comparisons[276](index=276&type=chunk) Adjusted EBITDA by Segment (in millions) | Segment (in millions) | Three Months Ended June 30, 2025 Adjusted EBITDA | Three Months Ended June 30, 2024 Adjusted EBITDA | Six Months Ended June 30, 2025 Adjusted EBITDA | Six Months Ended June 30, 2024 Adjusted EBITDA | | :-------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Infrastructure | $19.3 | $32.5 | $36.0 | $50.8 | | Life Sciences | $(2.6) | $(4.8) | $(11.3) | $(9.0) | | Spectrum | $1.0 | $1.5 | $2.4 | $3.1 | | Non-Operating Corporate | $(2.0) | $(2.5) | $(4.2) | $(5.4) | | Total Adjusted EBITDA | $15.7 | $26.7 | $22.9 | $39.5 | - The decrease in Adjusted EBITDA was primarily driven by lower revenue and gross margins in the Infrastructure segment[279](index=279&type=chunk)[284](index=284&type=chunk) [Backlog](index=61&type=section&id=Backlog) Backlog represents estimated future revenues from awarded contracts, fluctuating with new awards and revenue recognition [Infrastructure Segment](index=61&type=section&id=Infrastructure%20Segment) DBMG's backlog was **$1,254.4 million** as of June 30, 2025, with **58.8%** attributable to five large contracts, indicating a concentration risk - DBMG's backlog was **$1,254.4 million** as of June 30, 2025, consisting of **$1,140.8 million** under contracts/purchase orders and **$113.6 million** under letters of intent/notices to proceed[289](index=289&type=chunk) - Approximately **58.8%** of DBMG's backlog (**$737.1 million**) was attributable to five contracts, indicating a concentration risk[289](index=289&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity needs are for debt service and operations, with **$33.4 million** cash and **$641.3 million** debt, and subsequent refinancing [Short- and Long-Term Liquidity Considerations and Risks](index=62&type=section&id=Short-%20and%20Long-Term%20Liquidity%20Considerations%20and%20Risks) Consolidated cash was **$33.4 million** and principal indebtedness **$641.3 million**, with substantial doubt about going concern due to debt maturities - Consolidated cash and cash equivalents (excluding restricted cash) were **$33.4 million** as of June 30, 2025, down from **$48.8 million** at December 31, 2024[292](index=292&type=chunk) - Total consolidated principal indebtedness was **$641.3 million** as of June 30, 2025, a net decrease of **$27.0 million** from December 31, 2024[294](index=294&type=chunk) - The company faces substantial doubt about its ability to continue as a going concern within one year due to upcoming debt maturities (R2 Technologies) and cross-default provisions in its Senior Secured Notes[300](index=300&type=chunk)[301](index=301&type=chunk) [Rights Offering and Concurrent Private Placement](index=63&type=section&id=Rights%20Offering%20and%20Concurrent%20Private%20Placement) In April 2024, the company completed a rights offering and private placement, raising **$35.0 million** for general corporate purposes - The company completed a rights offering and concurrent private placement in April 2024, raising **$35.0 million** in aggregate gross proceeds[298](index=298&type=chunk) - Net proceeds were used for general corporate purposes, including debt service and working capital[299](index=299&type=chunk) - A mandatory prepayment of **$4.1 million** was made on the CGIC Unsecured Note on April 26, 2024, as a result of the offering[299](index=299&type=chunk) [Going Concern](index=63&type=section&id=Going%20Concern) Substantial doubt exists about the company's ability to continue as a going concern due to debt maturities, despite management's mitigation plans - Substantial doubt exists about the company's ability to continue as a going concern within one year due to upcoming debt maturities and cross-default provisions[300](index=300&type=chunk)[301](index=301&type=chunk) - Management plans include asset sales, debt refinancing, and raising additional capital, but success is not assured[303](index=303&type=chunk) - DBMG, the largest subsidiary, is operationally profitable and in good standing with its lenders, despite the parent company's going concern issues[305](index=305&type=chunk) [Capital Expenditures](index=64&type=section&id=Capital%20Expenditures) Total capital expenditures for six months ended June 30, 2025, increased to **$10.8 million**, driven by Infrastructure and Spectrum Capital Expenditures by Segment (in millions) | Segment (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Infrastructure | $5.1 | $2.7 | $9.2 | $7.9 | | Life Sciences | $(0.1) | $0.0 | $0.0 | $0.1 | | Spectrum | $1.1 | $0.4 | $1.6 | $0.7 | | Total | $6.1 | $3.1 | $10.8 | $8.7 | [Indebtedness](index=64&type=section&id=Indebtedness) The company's consolidated principal debt was **$641.3 million**, with subsequent refinancing extending maturities for various corporate and subsidiary debts - Total outstanding principal debt was **$641.3 million** as of June 30, 2025[294](index=294&type=chunk) - Subsequent to quarter-end (August 4, 2025), the company closed a series of indebtedness refinancing transactions to extend debt maturities[307](index=307&type=chunk) [Non-Operating Corporate](index=64&type=section&id=Non-Operating%20Corporate) Non-Operating Corporate had **$429.9 million** in principal debt, with subsequent refinancing extending maturities for its Senior Secured Notes and other debt - Non-Operating Corporate segment indebtedness was **$429.9 million** as of June 30, 2025, including **$330.0 million** in **8.50% 2026** Senior Secured Notes and **$48.9 million** in **7.50% 2026** Convertible Notes[295](index=295&type=chunk) - The Revolving Line of Credit with MSD had a **$20.0 million** outstanding balance as of June 30, 2025, with a maturity date extended to August 1, 2025 (and further to September 15, 2026, post-quarter)[311](index=311&type=chunk)[211](index=211&type=chunk) - The CGIC Unsecured Note had a principal amount of **$35.1 million**, with interest rates increasing over time (**32.0%** per annum after May 8, 2025), and was subject to mandatory prepayments from asset/equity sales[313](index=313&type=chunk) [Infrastructure](index=66&type=section&id=Infrastructure) Infrastructure segment's outstanding debt was **$115.2 million**, with DBMG entering a new **$220.0 million** credit agreement maturing May 20, 2030 - Infrastructure segment had **$115.2 million** in aggregate principal outstanding debt as of June 30, 2025[315](index=315&type=chunk) - DBMG entered into a new **$220.0 million** credit agreement (revolving facility of **$135.0 million** and term loan of **$85.0 million**) maturing May 20, 2030, to repay existing debt and provide working capital[316](index=316&type=chunk) [Life Sciences](index=66&type=section&id=Life%20Sciences) Life Sciences had **$26.5 million** in outstanding debt, primarily R2 Technologies' note with Lancer Capital, extended to August 1, 2026 - Life Sciences segment had **$26.5 million** in aggregate principal outstanding debt as of June 30, 2025[319](index=319&type=chunk) - R2 Technologies' **20%** senior secured promissory note with Lancer Capital had a total carrying amount of **$41.6 million** as of June 30, 2025, including principal, capitalized interest, and accrued exit fees[321](index=321&type=chunk) - Pansend closed on new **$3.5 million** and **$3.0 million** convertible note instruments with R2 Technologies in February and June 2025, respectively, with maturities extended to July 31, 2026, post-quarter[323](index=323&type=chunk) [Spectrum](index=67&type=section&id=Spectrum) Spectrum segment had **$69.7 million** in outstanding debt, with its notes' maturity extended to September 30, 2026, and **$15.9 million** in exit fees - Spectrum segment had **$69.7 million** in aggregate principal outstanding debt as of June 30, 2025[325](index=325&type=chunk) - The maturity date of Spectrum's **8.50%** and **11.45%** Notes was August 15, 2025 (extended to September 30, 2026, post-quarter)[325](index=325&type=chunk)[213](index=213&type=chunk) - Exit fees of **$15.9 million** associated with the notes are recorded as a liability, amortized over the remaining life of the notes[326](index=326&type=chunk) [Restrictive Covenants](index=68&type=section&id=Restrictive%20Covenants) The company's debt instruments contain restrictive covenants; a minimum liquidity covenant non-compliance was subsequently cured post-quarter-end - The Secured Indenture governing the **2026** Senior Secured Notes contains affirmative and negative covenants, including limitations on indebtedness, liens, dividends, and asset sales[329](index=329&type=chunk) - The company was in non-compliance with the minimum liquidity covenant as of June 30, 2025, but cured it post-quarter-end by liquidating **$2.9 million** in marketable securities[331](index=331&type=chunk) - DBMG is in compliance with its debt covenants, including Fixed Charge Coverage Ratio and Senior Funded Indebtedness to EBITDA Ratio[96](index=96&type=chunk)[335](index=335&type=chunk) [Summary of Consolidated Cash Flows](index=69&type=section&id=Summary%20of%20Consolidated%20Cash%20Flows) For six months ended June 30, 2025, cash from operations improved to **$26.3 million**, with increased cash used in investing and financing activities Summary of Consolidated Cash Flows (in millions) | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :------------------- | :----------------------------- | :----------------------------- | :----- | | Cash provided by (used in) operating activities | $26.3 | $(3.9) | $30.2 | | Cash used in investing activities | $(10.2) | $(0.7) | $(9.5) | | Cash (used in) provided by financing activities | $(32.2) | $4.6 | $(36.8) | | Net decrease in cash and cash equivalents, including restricted cash | $(15.3) | $(0.6) | $(14.7) | [Operating Activities](index=69&type=section&id=Operating%20Activities) Cash from operating activities improved by **$30.2 million** to **$26.3 million**, driven by Infrastructure, partially offset by Non-Operating Corporate - Cash provided by operating activities improved by **$30.2 million**, from cash used of **$3.9 million** in 2024 to cash provided of **$26.3 million** in 2025[339](index=339&type=chunk) - Improvement was primarily driven by decreased working capital outflows at the Infrastructure segment[339](index=339&type=chunk) - Partially offset by increased cash used in operating activities at the Non-Operating Corporate segment due to higher cash paid for taxes and interest[339](index=339&type=chunk) [Investing Activities](index=69&type=section&id=Investing%20Activities) Cash used in investing activities increased by **$9.5 million** to **$10.2 million** due to higher capital expenditures and new marketable investment purchases - Cash used in investing activities increased by **$9.5 million**, from **$0.7 million** in 2024 to **$10.2 million** in 2025[340](index=340&type=chunk) - Increase driven by higher capital expenditures in Infrastructure and Spectrum, fewer proceeds from prior year asset disposals, and new marketable investment purchases[340](index=340&type=chunk) [Financing Activities](index=69&type=section&id=Financing%20Activities) Cash used in financing activities increased by **$36.8 million** to **$32.2 million**, due to absence of prior year's rights offering proceeds and increased debt repayments - Cash used in financing activities increased by **$36.8 million**, from cash provided of **$4.6 million** in 2024 to cash used of **$32.2 million** in 2025[341](index=341&type=chunk) - The increase in cash outflows was primarily due to the absence of **$33.2 million** in net proceeds from the 2024 Rights Offering and Concurrent Private Placement[341](index=341&type=chunk) - Net repayments on other debt obligations increased by **$17.4 million**, driven by Infrastructure's debt refinancing[341](index=341&type=chunk) [Infrastructure](index=70&type=section&id=Infrastructure) DBMG's operating cash flows are its primary funding source, relying on credit facilities for working capital and anticipating adequate funds - DBMG's cash flows from operating activities are the principal source of cash for operating expenses, interest payments, and capital expenditures[342](index=342&type=chunk) - DBMG relies on its credit facilities to meet working capital needs and believes available funds will be adequate for the foreseeable future[342](index=342&type=chunk) - DBMG anticipates monthly interest payments of approximately **$2.2 million** for each remaining quarter of 2025[343](index=343&type=chunk) [New Accounting Pronouncements](index=70&type=section&id=New%20Accounting%20Pronouncements) This section refers to Note 2 for details on new accounting pronouncements, including several ASUs, which the company is currently evaluating - Refer to Note 2 for details on recent accounting pronouncements, including ASU 2025-05 (Financial Instruments - Credit Losses), ASU 2025-04 (Compensation—Stock Compensation), ASU 2025-03 (Business Combinations), ASU 2023-09 (Income Taxes), and ASU 2024-04 (Debt - Debt with Conversion and Other Options)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[344](index=344&type=chunk) - The company is currently evaluating the potential effect of these ASUs on its condensed consolidated financial statements[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [Critical Accounting Estimates](index=70&type=section&id=Critical%20Accounting%20Estimates) No material changes occurred in critical accounting policies during the period ended June 30, 2025, with details in the 2024 Annual Report on Form 10-K - No material changes occurred in the company's critical accounting policies during the period ended June 30, 2025[345](index=345&type=chunk) - Refer to 'Critical Accounting Estimates' under Item 7 of the 2024 Annual Report on Form 10-K for detailed information[345](index=345&type=chunk) [Related Party Transactions](index=70&type=section&id=Related%20Party%20Transactions) This section directs readers to Note 16 for a discussion of related party transactions, including Lancer Capital, CGIC, Huadong, and Blossom Innovations - Refer to Note 16 for a discussion of related party transactions[346](index=346&type=chunk) - Related parties include Lancer Capital (controlled by Chairman Avram A. Glazer), CGIC, Huadong, and Blossom Innovations[157](index=157&type=chunk)[159](index=159&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Special Note Regarding Forward-Looking Statements](index=70&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section emphasizes that the report contains forward-looking statements subject to risks and uncertainties, advising against undue reliance - The report contains forward-looking statements that inherently involve risks and uncertainties and are not guarantees of performance[347](index=347&type=chunk) - Key factors that could cause actual results to differ include dependence on subsidiary distributions, substantial doubt about going concern, inability to refinance debt, capital market conditions, and changes in regulations and taxes[348](index=348&type=chunk)[351](index=351&type=chunk) - Specific risk factors are also outlined for the Infrastructure, Life Sciences, and Spectrum segments, such as adverse weather, cost overruns, governmental regulation, and competitive markets[352](index=352&type=chunk)[354](index=354&type=chunk) [INNOVATE Corp. and Subsidiaries](index=71&type=section&id=INNOVATE%20Corp.%20and%20Subsidiaries) Forward-looking statements for INNOVATE Corp. and subsidiaries are subject to risks including dependence on subsidiary distributions, going concern, and debt refinancing - Risks include dependence on subsidiary distributions to fund operations and obligations[351](index=351&type=chunk) - Substantial doubt about the ability to continue operating as a going concern[351](index=351&type=chunk) - Possible inability to refinance existing debt or raise additional capital[351](index=351&type=chunk) - Impact of covenants in debt indentures and preferred stock certificates on business operations and financing[351](index=351&type=chunk) [Infrastructure / DBM Global Inc.](index=72&type=section&id=Infrastructure%20/%20DBM%20Global%20Inc.) Specific risks for Infrastructure include adverse weather, inability to refinance debt, cost overruns, uncertain contract timing, and material/labor cost changes - Risks include adverse impacts from weather affecting performance and timeliness of project completion[354](index=354&type=chunk) - Possible inability to refinance existing debt or raise additional capital[354](index=354&type=chunk) - Cost overruns on fixed-price contracts or failure to receive timely payments on cost-reimbursable contracts[354](index=354&type=chunk) [Life Sciences / Pansend Life Sciences, LLC](index=72&type=section&id=Life%20Sciences%20/%20Pansend%20Life%20Sciences,%20LLC) Risks for Life Sciences include inability to refinance debt, challenges in product development for development-stage companies, medical advances, and governmental regulation - Risks include possible inability to refinance existing debt or raise additional capital[354](index=354&type=chunk) - Ability to invest in development stage companies and develop products/treatments related to portfolio companies[354](index=354&type=chunk) - Impact of medical advances in healthcare and biotechnology, and governmental regulation in the healthcare industry[354](index=354&type=chunk) [Spectrum / HC2 Broadcasting Holdings Inc.](index=72&type=section&id=Spectrum%20/%20HC2%20Broadcasting%20Holdings%20Inc.) Risks for Spectrum include inability to refinance debt, challenges in competitive markets, maintaining market share, new competition, and FCC regulation - Risks include possible inability to refinance existing debt or raise additional capital[354](index=354&type=chunk) - Ability to operate in highly competitive markets and maintain market share[354](index=354&type=chunk) - Impact of new and growing sources of competition and FCC regulation of the television broadcasting industry[354](index=354&type=chunk) [Item 4. Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated as effective as of June 30, 2025[355](index=355&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[356](index=356&type=chunk) [PART II. OTHER INFORMATION](index=73&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity security sales, and a list of exhibits [Item 1. Legal Proceedings](index=73&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings and claims, which management does not believe will have a material adverse effect - The company is subject to claims and legal proceedings arising in the ordinary course of business[357](index=357&type=chunk) - Management does not believe pending claims and legal proceedings will have a material adverse effect on the Condensed Consolidated Financial Statements[357](index=357&type=chunk) - Liabilities are recorded when a loss is known or considered probable and the amount can be reasonably estimated[357](index=357&type=chunk) [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred in risk factors from the Fiscal Year 2024 Form 10-K, which provides a complete description of material risks - No material changes in risk factors from those disclosed in the Fiscal Year 2024 Form 10-K[358](index=358&type=chunk) - Refer to 'Risk Factors' in Item 1A of Part I of the Fiscal Year 2024 Form 10-K for a complete description of material risks[358](index=358&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details equity award share withholdings, with **80 shares** withheld for taxes at **$5.55** per share during the three months ended June 30, 2025 [Issuer Purchases of Equity Securities](index=73&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) During the three months ended June 30, 2025, **80 shares** of common stock were withheld for taxes at **$5.55** per share for equity award vesting - **80 shares** of common stock were withheld for taxes in connection with equity award vesting during the three months ended June 30, 2025[359](index=359&type=chunk) - The weighted-average price for withheld shares was **$5.55** per share[359](index=359&type=chunk) [Item 5. Other Information](index=73&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the six months ended June 30, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the six months ended June 30, 2025[360](index=360&type=chunk) [Item 6. Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including indentures for new and existing notes, credit agreements, and certifications - Exhibits include indentures for new **10.500%** senior secured notes due 2027 and **9.500%** convertible senior secured notes due 2027[362](index=362&type=chunk) - Amendments to credit agreements (Seventh and Eighth Amendments to Credit Agreement, Tenth Omnibus Amendment to Secured Notes) are also filed[362](index=362&type=chunk) - Certifications by the Chief Executive Officer and Chief Financial Officer (Rule 13a-14(a)/15d-14(a) and Section 1350) are included[363](index=363&type=chunk) [SIGNATURES](index=76&type=section&id=SIGNATURES) The report is signed by Michael J. Sena, Chief Financial Officer, on August 5, 2025, affirming compliance with the Securities Exchange Act - The report was signed by Michael J. Sena, Chief Financial Officer, on August 5, 2025[367](index=367&type=chunk)

Core Insights - INNOVATE Corp. reported a significant decline in revenue and net income for the second quarter of 2025, primarily driven by challenges in the Infrastructure segment and a slight decline in the Spectrum segment, while the Life Sciences segment showed growth [2][9][14]. Financial Performance - Consolidated revenue for Q2 2025 was $242.0 million, a decrease of 22.7% from $313.1 million in Q2 2024 [2][9]. - Net loss attributable to common stockholders was $22.0 million, or $1.67 per diluted share, compared to a net income of $14.1 million, or $1.03 per diluted share, in the prior year [2][14]. - Total Adjusted EBITDA decreased to $15.7 million from $26.7 million year-over-year, reflecting a decline of 41.2% [2][18]. Segment Performance - The Infrastructure segment reported a revenue of $233.1 million, down 23.6% from $305.2 million in the prior year quarter, attributed to project timing and size [10][12]. - Life Sciences segment revenue increased to $3.2 million, an 88.2% rise compared to $1.7 million in the prior year, driven by strong sales growth in R2 products [10][11]. - Spectrum segment revenue was $5.7 million, a slight decrease from $6.2 million in the prior year, impacted by softer ad sales and network churn [10][11]. Strategic Initiatives - The company completed refinancing transactions that extend debt maturities, enhancing financial flexibility [3][4]. - The Infrastructure segment's adjusted backlog remained strong at $1.3 billion, indicating ongoing project acquisition efforts [3][10]. - R2 Technologies is experiencing significant growth in system unit sales, particularly outside North America [3][10]. Market Outlook - The company anticipates continued momentum in the Infrastructure and Life Sciences segments, with expectations for improved performance in the second half of 2025 [3][10]. - New datacasting initiatives in the Spectrum segment are expected to generate revenue, with the launch of ATSC 3.0 stations for a large mobile carrier [10][11].

Core Viewpoint - INNOVATE Corp. has successfully extended its debt maturity profile by refinancing a significant portion of its outstanding debt, specifically 81.7% of the total principal amount as of June 30, 2025, through various transactions aimed at exchanging or amending existing debt instruments [1][2]. Debt Refinancing Transactions - The refinancing transactions include an exchange offer for senior secured notes, privately negotiated exchanges of convertible senior notes, and amendments to existing credit agreements and notes [2]. - The company issued approximately $360.3 million in new senior secured notes in exchange for about $328.1 million of existing senior secured notes, resulting in a new interest rate of 10.500% due in 2027 [3]. - The company plans to make interest payments on any remaining existing senior secured notes after the final settlement of the exchange offer on August 29, 2025 [4]. Exchange Offer Details - The expiration deadline for the exchange offer is set for midnight on August 13, 2025, with final settlement expected on August 15, 2025 [5]. - Following the initial settlement, approximately $1.9 million of existing senior secured notes will remain outstanding [4]. Amendments to Existing Notes - Amendments to the existing senior secured notes include the elimination of most restrictive covenants and certain events of default, along with modifications to merger and consolidation covenants [6][9]. - The liens securing the existing senior secured notes have been subordinated to the new senior secured notes and other debts [6]. New Convertible Notes - The company exchanged approximately $48.7 million of existing convertible senior notes for about $53.5 million of newly issued convertible senior secured notes, with a new interest rate of 9.5% due in 2027 [7]. - The new convertible notes were issued under a private placement exemption and will not be registered under the Securities Act [8]. Revolving Credit Agreement and Other Debt - The maturity of the 2020 Revolving Credit Agreement has been extended to September 15, 2026 [10]. - The maturity of the CGIC note has been extended to April 30, 2027, with an interest rate of 16%, and the amended note is secured by a third priority lien [11]. - The maturity of the Spectrum notes has been extended to September 30, 2026, with specific milestones required for repayment [12]. - The maturity of R2 Technologies' senior secured promissory note has been extended to August 1, 2026, with an interest rate of 12% [13].

Core Viewpoint - INNOVATE Corp. has announced early participation results for its exchange offer of 8.5% Senior Secured Notes due 2026, allowing eligible holders to exchange for newly issued 10.5% Senior Secured Notes due 2027, with a significant participation rate of 99.41% [1][3]. Group 1: Exchange Offer Details - The exchange offer allows holders of the existing 8.5% Senior Secured Notes to exchange them for new 10.5% Senior Secured Notes, with the early participation deadline set for July 30, 2025 [1]. - A total of US$328,067,000 of the existing notes were tendered, representing 99.41% of the outstanding amount, meeting the minimum exchange condition of 98% [2][3]. - The early settlement of the exchange offer is expected to occur on August 4, 2025, pending satisfaction of all conditions [5]. Group 2: Terms of New Senior Secured Notes - The new notes will have a maturity date of February 1, 2027, and an interest rate of 10.5%, with the first payment delivered as additional exchange consideration [6]. - Holders of the existing notes will receive a total of US$1,072.50 in principal amount of new notes per US$1,000 of existing notes accepted for exchange, which includes an early exchange premium [9][10]. Group 3: Proposed Amendments and Conditions - Holders of the existing notes that participated in the exchange consented to amendments that eliminate most restrictive covenants and subordinate liens on collateral [7]. - The consummation of the exchange offer is conditioned on several concurrent transactions, which may be waived by the company with certain noteholder consent [11]. Group 4: Important Dates - The expiration deadline for the exchange offer is set for midnight on August 13, 2025, with final settlement expected on August 15, 2025 [8].

Core Viewpoint - INNOVATE Corp. announced that its subsidiary DBM Global Inc. will pay a cash dividend of approximately $4.4 million, or $1.14 per share, to its stockholders on August 21, 2025, with INNOVATE expected to receive around $4 million of this payout [1] Company Overview - INNOVATE Corp. operates a portfolio of assets in three key areas: Infrastructure, Life Sciences, and Spectrum, employing approximately 3,100 people across its subsidiaries [2] - DBM Global Inc. specializes in integrated steel construction services and offers a range of professional services including design-assist, engineering, and project management, serving various market segments such as commercial, healthcare, and public works [3]