SWK Holdings(SWKH) - 2025 Q1 - Quarterly Results

Financial and Operational Highlights SWK Holdings reported strong Q1 2025 financial results, driven by significant net income growth and increased tangible book value First Quarter 2025 Financial Results SWK Holdings reported Q1 2025 GAAP net income of $4.5 million and a 10.5% increase in non-GAAP tangible book value per share Q1 2025 vs Q1 2024 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $11.8 million | $11.4 million | +3.5% | | GAAP Net Income | $4.5 million | $0.5 million | +800% | | GAAP Diluted EPS | $0.37 | $0.04 | +825% | | Finance Receivables Segment Adjusted Non-GAAP Net Income | $8.6 million | $2.3 million | +274% | | GAAP Book Value Per Share | $23.94 | $22.42 | +6.8% | | Non-GAAP Tangible Financing Book Value Per Share | $21.73 | $19.66 | +10.5% | - The $0.4 million increase in total revenue was primarily due to a $0.7 million increase in Pharmaceutical Development segment revenue, which offset a $0.3 million decrease in Finance Receivables segment revenue[5] - CEO Jody Staggs noted that following a royalty monetization, the company's non-cash assets include approximately $231.9 million of gross finance receivables with a 14.5% effective yield, plus $4.7 million in public equities and warrants, and the MOD3 Pharma division[4] - After the quarter closed, SWK monetized the majority of its royalty portfolio for approximately book value and subsequently paid a $4.00 per share dividend[8] Portfolio Analysis SWK's Q1 2025 portfolio activity included new loan commitments, significant royalty monetizations, and increased effective yield Portfolio Status and Key Metrics SWK's Q1 2025 portfolio saw a new $15.0 million loan, a $34.0 million royalty sale, and an effective yield increase to 14.5% - Key portfolio activities during the first quarter included: - A new $15.0 million term loan commitment to ImpediMed - An agreement to sell the majority of the royalty portfolio for $34.0 million, which closed in April 2025 - A final payment of $12.2 million from MolecuLight, satisfying its obligation - A $17.3 million payment from ANI Pharmaceuticals to buy out the Iluvien royalty[12] Portfolio Yields (Q1 2025 vs Q1 2024) | Yield Type | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Effective Yield | 14.5% | 14.2% | +30 bps | | Realized Yield | 15.5% | 16.3% | -80 bps | - As of March 31, 2025, the company had three finance receivables on nonaccrual status with a total carrying value of $12.7 million: Flowonix ($7.4M), Best ABT ($2.3M), and Ideal Implant ($3.0M)[14] Total Portfolio Investment Activity (in thousands) | | Three Months Ended March 31, 2025 | | :--- | :--- | | Beginning Portfolio | $ 282,706 | | Investment in finance receivables | 10,000 | | Paydowns received on investments & royalties | (32,693) | | Finance receivables held for sale | (31,678) | | Ending Portfolio | $ 227,776 | Non-GAAP Financial Measures This section details reconciliations of GAAP to non-GAAP financial measures, including adjusted net income and tangible book value Reconciliation of GAAP to Non-GAAP Adjusted Net Income Non-GAAP adjusted net income for Q1 2025 reached $8.1 million, reflecting adjustments for non-cash items and one-time events Reconciliation to Non-GAAP Net Income (in thousands) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | 2025 | 2024 | | Net income (GAAP) | $4,539 | $468 | | Add: Loss on revaluation of finance receivables held for sale | $3,727 | — | | Add: Income tax expense | $1,278 | $229 | | Subtract: Realized gain on asset payoff | ($1,729) | — | | Other adjustments | $298 | $430 | | Non-GAAP net income | $8,113 | $1,137 | - Management adjusts for non-cash items such as changes in fair-market value of equities and warrants, income taxes (due to substantial NOLs), amortization, and foreign currency gains/losses to provide a clearer view of ongoing operations[16][22] Reconciliation to Finance Receivables Adjusted Non-GAAP Net Income Finance Receivables segment adjusted non-GAAP net income increased to $8.6 million in Q1 2025, isolating core business profitability Finance Receivables Segment Adjusted Non-GAAP Net Income (in thousands) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | 2025 | 2024 | | Non-GAAP net income | $8,113 | $1,137 | | Add: MOD3 operating loss, excluding amortization | $536 | $1,166 | | Finance Receivables segment adjusted non-GAAP net income | $8,649 | $2,303 | - This non-GAAP measure is designed to show the profitability of the core Finance Receivables segment by eliminating the operating results of the MOD3 pharmaceutical development segment[18][23] Reconciliation of GAAP to Non-GAAP Tangible Finance Book Value Per Share Non-GAAP tangible financing book value per share rose 10.5% to $21.73, reflecting adjustments for non-core assets Non-GAAP Tangible Finance Book Value Per Share Reconciliation | | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | GAAP book value per share | $23.94 | $22.42 | | Less: Deferred tax assets, net | ($1.82) | ($2.25) | | Less: Intangible assets, net & MOD3 PP&E | ($0.40) | ($0.90) | | Plus: Contingent consideration payable | $0.00 | $0.39 | | Non-GAAP Tangible book value per share | $21.73 | $19.66 | - Management views non-GAAP tangible financing book value per share as a relevant metric to value the Company's core finance receivable business by removing deferred tax assets and the net asset value of the MOD3 division[11][23] Consolidated Financial Statements This section presents the unaudited condensed consolidated balance sheets, income statements, and cash flow statements Unaudited Condensed Consolidated Balance Sheets Total assets were $331.3 million as of March 31, 2025, reflecting increased cash, reclassified finance receivables, and reduced liabilities Selected Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $29,809 | $5,927 | | Finance receivables, net | $223,076 | $277,760 | | Finance receivables... held for sale | $33,990 | $0 | | Total assets | $331,264 | $332,235 | | Revolving credit facility | $0 | $6,233 | | Total liabilities | $38,595 | $43,545 | | Total stockholders' equity | $292,669 | $288,690 | Unaudited Condensed Consolidated Statements of Income Q1 2025 total revenues reached $11.8 million, with net income significantly increasing to $4.5 million due to credit loss benefits and asset gains Selected Income Statement Data (in thousands) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $11,832 | $11,360 | | Provision (benefit) for credit losses | ($1,465) | $5,297 | | Income from operations | $8,113 | $1,079 | | Realized gain on early payment of finance receivable | $1,729 | $0 | | Loss on revaluation of finance receivables held for sale | ($3,727) | $0 | | Net income | $4,539 | $468 | | Diluted EPS | $0.37 | $0.04 | Unaudited Condensed Consolidated Statements of Cash Flows The company generated $8.3 million in operating cash flow and saw a $23.9 million net increase in cash during Q1 2025 Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,280 | $4,430 | | Net cash provided by investing activities | $22,702 | $9,181 | | Net cash used in financing activities | ($7,100) | ($13,349) | | Net increase in cash | $23,882 | $262 | | Cash at end of period | $29,809 | $5,498 | Other Information This section details the upcoming conference call and provides an overview of SWK Holdings' business model Conference Call and Company Information SWK Holdings will host a Q1 2025 earnings call and operates as a life science specialty finance firm, including the MOD3 Pharma division - A conference call to discuss Q1 2025 results is scheduled for May 16, 2025, at 9:00 a.m. CST[25] - SWK Holdings is a specialty finance company that provides non-dilutive financing (structured debt, royalty monetization) to commercial-stage healthcare companies, typically in amounts ranging from $5.0 million to $25.0 million[26] - The press release includes a Safe Harbor statement, cautioning that forward-looking statements involve risks and uncertainties and that actual results could differ materially[27]