Guardian Pharmacy Services, Inc.(GRDN) - 2025 Q2 - Quarterly Report

Filing Information This section provides essential identification and status details for Guardian Pharmacy Services, Inc.'s Form 10-Q filing Registrant Details This section provides the basic identification details for Guardian Pharmacy Services, Inc.'s Form 10-Q filing, including its legal name, state of incorporation, principal executive offices, and telephone number - Registrant: Guardian Pharmacy Services, Inc.[2] - State of Incorporation: Delaware[2] - Principal Executive Offices: 300 Galleria Parkway SE, Suite 800, Atlanta, Georgia 30339[3] Filer Status and Shares Outstanding Guardian Pharmacy Services, Inc. is classified as a Non-accelerated filer, Smaller reporting company, and Emerging growth company, with specific Class A and Class B common stock shares outstanding as of August 1, 2025 - Filer Status: Non-accelerated filer, Smaller reporting company, Emerging growth company[5] Shares Outstanding as of August 1, 2025 | Class of Stock | Shares Outstanding | | :--------------- | :----------------- | | Class A Common Stock | 22,730,591 | | Class B Common Stock | 40,590,569 | Special Note Regarding Forward-Looking Statements This section provides a cautionary note regarding the forward-looking nature of statements within the report and the inherent risks and uncertainties involved Nature of Forward-Looking Statements This section clarifies that the report contains forward-looking statements, which are not historical facts but rather expectations, beliefs, plans, and forecasts about future events or performance - Forward-looking statements are identified by words such as 'aims,' 'anticipates,' 'believes,' 'expects,' 'intends,' 'may,' 'plans,' 'will,' and similar expressions[10] - These statements are not guarantees of future performance and are subject to change based on various important factors, some beyond the company's control[10] Risk Factors Affecting Future Results The company highlights several factors that could cause actual results to differ from forward-looking statements, including business strategy execution, market competition, and regulatory compliance - Key factors that could cause actual results to differ include the ability to execute business strategies, market and sell services, maintain relationships with pharmaceutical wholesalers and LTCFs, and comply with healthcare laws[11] - Other risks involve the impact of public health crises, government efforts to lower pharmaceutical costs, consolidation of managed care organizations, retention of management and professionals, legal proceedings, and cybersecurity threats[11] - The company undertakes no obligation to update forward-looking statements, except as required by law[12] Part I. Financial Information This part presents the unaudited interim consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited interim consolidated financial statements for Guardian Pharmacy Services, Inc. and its subsidiaries, including the Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows, along with their accompanying notes Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2024 | June 30, 2025 | Change (Absolute) | Change (%) | | :-------------------------- | :------------------ | :-------------- | :---------------- | :--------- | | Total Current Assets | $151,985 | $170,461 | $18,476 | 12.16% | | Total Assets | $320,810 | $356,334 | $35,524 | 11.07% | | Total Current Liabilities | $144,121 | $143,993 | $(128) | -0.09% | | Total Liabilities | $170,834 | $176,663 | $5,829 | 3.41% | | Total Equity | $149,976 | $179,671 | $29,695 | 19.80% | - Cash and cash equivalents increased significantly from $4.66 million at December 31, 2024, to $18.82 million at June 30, 2025[15] - Goodwill increased from $69.30 million to $76.16 million, reflecting recent acquisitions[15] Consolidated Statements of Operations This section details the company's financial performance over specific periods, outlining revenues, expenses, and net income Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Change (Absolute) | Change (%) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Change (Absolute) | Change (%) | | :-------------------------------------- | :------------------------------- | :------------------------------- | :---------------- | :--------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Revenues | $300,037 | $344,334 | $44,297 | 14.76% | $575,447 | $673,642 | $98,195 | 17.06% | | Gross profit | $61,288 | $68,146 | $6,858 | 11.19% | $116,389 | $132,495 | $16,106 | 13.84% | | Operating income | $17,005 | $12,580 | $(4,425) | -26.02% | $24,938 | $25,585 | $647 | 2.59% | | Net income | $15,848 | $8,827 | $(7,021) | -44.30% | $22,943 | $18,100 | $(4,843) | -21.11% | | Net income attributable to Guardian Pharmacy Services, Inc. | $0 | $9,030 | N/A | N/A | $0 | $18,478 | N/A | N/A |\ | Basic EPS (Class A and B) | N/A | $0.15 | N/A | N/A | N/A | $0.30 | N/A | N/A | | Diluted EPS (Class A and B) | N/A | $0.14 | N/A | N/A | N/A | $0.29 | N/A | N/A | - The company recorded a provision for income taxes of $3.76 million for the three months ended June 30, 2025, and $7.59 million for the six months ended June 30, 2025, compared to $0 in the prior year periods due to the Corporate Reorganization and IPO[17] Consolidated Statements of Changes in Stockholders' Equity and Members' Equity This section illustrates the changes in the company's equity over time, reflecting net income, share-based compensation, and stock conversions Changes in Total Equity (in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------- | :------------------ | :-------------- | | Total Equity | $149,976 | $179,671 | - Total equity increased by $29.70 million from December 31, 2024, to June 30, 2025, driven by net income attributable to Guardian Pharmacy Services, Inc. ($9.03 million for Q2 2025), share-based compensation expense ($4.45 million for Q2 2025), and non-cash equity contributions[21] - 13,519,946 shares of Class B Common Stock were converted to Class A Common Stock during the period[21] Consolidated Statements of Cash Flows This section presents the cash inflows and outflows from operating, investing, and financing activities, showing the overall change in cash position Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Activity | 2024 | 2025 | Change (Absolute) | | :-------------------- | :---------- | :---------- | :---------------- | | Operating Activities | $37,787 | $37,486 | $(301) |\ | Investing Activities | $(16,702) | $(18,549) | $(1,847) |\ | Financing Activities | $(20,299) | $(4,780) | $15,519 | | Net Change in Cash | $786 | $14,157 | $13,371 | | Cash, End of Period | $1,538 | $18,817 | $17,279 | - Net cash provided by operating activities remained relatively stable, decreasing slightly by $0.3 million[25] - Net cash used in investing activities increased by $1.8 million, primarily due to higher purchases of property and equipment[25] - Net cash used in financing activities decreased significantly by $15.5 million, mainly due to lower member distributions compared to the prior year, partially offset by proceeds from equity offering and repurchase of Class A common stock in 2025[25] Notes to the Unaudited Interim Consolidated Financial Statements This section provides detailed explanations and additional information supporting the interim consolidated financial statements, clarifying accounting policies and significant events Note 1. Organization and Background This note describes the company's business, its corporate structure, and significant events such as the IPO and Corporate Reorganization - Guardian Pharmacy Services, Inc. provides technology-enabled pharmacy services to residents of long-term health care facilities (LTCFs), including assisted living and behavioral health facilities[27] - The company completed an IPO on September 27, 2024, issuing 9.2 million shares of Class A common stock at $14.00 per share, generating net proceeds of $119.78 million[33] - A Corporate Reorganization prior to the IPO converted Guardian Pharmacy, LLC into a wholly-owned subsidiary of the Company, with Class B common stock converting to Class A common stock over time[29][31][34] - In May 2025, a follow-on offering of 1,440,447 Class A common shares at $21.00 per share was completed, with net proceeds used to repurchase an equal number of Class A shares from converted Class B shares, resulting in no change to outstanding Class A shares[35] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the financial statements, including consolidation, revenue recognition, and recent accounting pronouncement adoptions - The financial statements are prepared in conformity with U.S. GAAP for interim financial reporting and include the accounts of the Company and all controlled subsidiaries[38] - The Corporate Reorganization was accounted for as a combination of entities under common control, with Guardian Pharmacy, LLC considered the accounting predecessor[40] - The company adopted ASU 2023-07 (Segment Reporting) for annual disclosures on January 1, 2024, and for interim disclosures on January 1, 2025, and ASU 2024-01 (Profits Interest) on January 1, 2025, with no material impact[43][47][49] - New accounting standards not yet effective include ASU 2023-09 (Income Taxes), ASU 2024-03 (Expense Disaggregation), and ASU 2025-03 (Business Combinations), which the company is currently evaluating for impact[48] Note 3. Acquisitions This note details the company's acquisition strategy and summarizes the financial impact of business combinations completed in 2024 and 2025 - The company's growth strategy includes acquiring institutional pharmacies serving LTCFs[52] 2025 Acquisitions Summary (in thousands) | Metric | Fair Value | | :-------------------------- | :--------- | | Total purchase consideration | $11,088 | | Cash consideration | $8,920 | | Contingent earnout payments | Up to $1,700 | | Goodwill | $6,867 | | Intangible Assets | $4,390 | 2024 Acquisitions Summary (in thousands) | Metric | Fair Value | | :-------------------------- | :--------- | | Total purchase consideration | $17,410 | | Cash consideration | $14,710 | | Contingent earnout payments | Up to $2,700 | | Goodwill | $13,250 | | Intangible Assets | $6,236 | - Goodwill from 2025 acquisitions ($6.87 million) and 2024 acquisitions ($13.25 million) represents future economic benefits from expanded presence, assembled workforce, and expected synergies[58][66] Note 4. Fair Value Measurements This note explains the company's methodology for fair value measurements, particularly for contingent consideration, and its impact on the balance sheet - The company uses a three-level valuation hierarchy for fair value measurements, with Level 3 inputs being unobservable and based on management's best estimates[69][71] Contingent Consideration Payable (in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :------------------ | :-------------- | | Contingent consideration payable | $2,700 | $2,450 | - The fair value of contingent consideration obligations decreased from $2.70 million at December 31, 2024, to $2.45 million at June 30, 2025, after accounting for current year acquisitions ($1.70 million) and payments ($1.95 million)[72] Note 5. Commitments and Contingencies This note addresses the company's exposure to legal proceedings and claims, outlining its policy for establishing loss provisions - The company is subject to legal proceedings and claims in the ordinary course of business and establishes loss provisions when losses are probable and estimable[73] Legal Expenses (Six Months Ended June 30, in thousands) | Year | Legal Expenses | | :--- | :------------- | | 2024 | $4,508 | | 2025 | $2,304 | Note 6. Basic and Diluted Net Income Per Share This note provides details on the calculation of basic and diluted earnings per share for Class A and Class B common stock, highlighting their identical rights - Basic and diluted EPS for Class A and Class B common stock are equal due to identical rights and privileges, except for transfer restrictions on Class B shares[75] Basic and Diluted Net Income Per Share (Class A and B Common Stock) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------------------- | :------------------------------- | :----------------------------- | | Net income attributable to Guardian Pharmacy Services, Inc. | $9,030 thousand | $18,478 thousand | | Basic EPS | $0.15 | $0.30 | | Diluted EPS | $0.14 | $0.29 | | Weighted-average Class A and B common shares outstanding (Basic) | 62,045,901 | 62,044,614 | | Weighted-average Class A and B common shares outstanding (Diluted) | 63,203,003 | 63,055,106 | - EPS information is only presented for periods following the IPO (June 30, 2025), as prior periods' calculations were not meaningful[18][76] Note 7. Share-based Compensation This note describes the company's share-based compensation plans, including the conversion of awards and the recognition of related expenses - Restricted Interest Unit awards were converted into Class B common stock in connection with the Corporate Reorganization and IPO[80] - On March 28, 2025, 13,519,946 shares of Class B common stock automatically converted to Class A common stock[81] Share-based Compensation Expense (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Pre-IPO awards | $(272) | $0 | $5,673 | $0 | | Unvested Class A and B common stock | $0 | $3,383 | $0 | $6,767 | | Restricted stock units | $0 | $1,063 | $0 | $1,647 | | Total share-based compensation expense (income) | $(272) | $4,446 | $5,673 | $8,414 | Unamortized Share-based Compensation Costs (as of June 30, 2025, in thousands) | Award Type | Amount | Weighted Average Remaining Service Period (years) | | :-------------------------- | :----- | :---------------------------------------------- | | Unvested Class A and B common stock | $3,274 | 0.3 | | Restricted stock units | $10,911 | 2.6 | | Total | $14,185 | | Note 8. Segments This note clarifies that the company operates as a single operating segment, with revenue derived solely from pharmaceutical and medical product sales within the United States - The company operates as a single operating segment, deriving revenue primarily from sales of pharmaceutical and medical products solely within the United States[85] - The Chief Operating Decision Maker (CODM) assesses performance and allocates resources based on net income and total assets[86][87] Segment Net Income Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $300,037 | $344,334 | $575,447 | $673,642 | | Employee expenses (excluding share-based compensation) | $66,071 | $75,642 | $127,654 | $148,022 | | Share-based compensation expense | $(272) | $4,446 | $5,673 | $8,414 | | Depreciation and amortization | $4,874 | $5,489 | $9,625 | $10,756 | | Interest expense | $1,066 | $172 | $1,831 | $342 | | Income taxes | $0 | $3,760 | $0 | $7,593 | | Segment net income | $15,848 | $8,827 | $22,943 | $18,100 | Note 9. Income Taxes This note explains the company's income tax expense, effective tax rates, and the impact of the Corporate Reorganization and IPO on its tax status - Guardian Pharmacy Services, Inc. became subject to federal and state corporate income taxes starting September 27, 2024, following the Corporate Reorganization[91] Income Tax Expense and Effective Tax Rates | Period | Income Tax Expense (in thousands) | Effective Tax Rate | | :-------------------------------------- | :-------------------------------- | :----------------- | | Three Months Ended June 30, 2024 | $0 | 0% | | Three Months Ended June 30, 2025 | $3,760 | 29.9% | | Six Months Ended June 30, 2024 | $0 | 0% | | Six Months Ended June 30, 2025 | $7,593 | 29.6% | - The effective tax rate for 2025 was primarily influenced by state income taxes (approx. 5.0%) and non-deductible share-based compensation charges (approx. 3.5%)[92] - The company is assessing the impact of the recently enacted H.R. 1 (One Big Beautiful Bill Act) on its consolidated financial statements[93] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the corresponding periods in 2024 Overview This section provides a high-level description of Guardian Pharmacy Services' business, its market position, and core growth strategies - Guardian Pharmacy Services is a leading pharmacy services company providing technology-enabled services to long-term health care facilities (LTCFs), focusing on assisted living and behavioral health facilities[97] - As of June 30, 2025, the company's 52 pharmacies served approximately 195,000 residents in about 7,400 LTCFs across 38 states[97] - The core growth strategy involves increasing residents served through organic growth (new relationships, increased adoption) and acquired growth (acquiring operating pharmacies)[100] Corporate Reorganization and IPO This section details the company's IPO and the preceding corporate reorganization, including share issuance, proceeds, and stock conversion mechanisms - The company completed its IPO on September 27, 2024, issuing 9.2 million Class A common shares at $14.00 per share, raising $119.8 million net proceeds[101] - A Corporate Reorganization preceded the IPO, making the Company a holding company with 100% interest in Guardian Pharmacy, LLC, and converting certain subsidiary interests into Class B common stock[102][104] - Class B common stock automatically converts to Class A common stock on a one-for-one basis in four equal installments, with the first conversion occurring on March 28, 2025 (13,519,946 shares)[104][105] - A follow-on offering in May 2025 involved the sale of 1,440,447 Class A shares at $21.00 per share, with proceeds used to repurchase an equal number of Class A shares from converted Class B shares, resulting in no net change to outstanding Class A shares[106] Factors Affecting Comparability This section highlights that acquisitions completed in 2024 and 2025 significantly impact the comparability of the company's operating results across periods - Acquisitions completed in 2024 and 2025 significantly impacted the comparability of operating results between periods[109][110] Components of Results of Operations This section defines the key components of the company's financial performance, including revenue recognition, cost of goods sold, and selling, general, and administrative expenses - Revenue is recognized upon delivery of prescriptions and pharmacy services to LTCFs[111] - Cost of goods sold includes prescription fulfillment, pharmacy personnel expenses, delivery charges, and supporting overhead[112] - Selling, general, and administrative expenses cover personnel, facilities, software, sales and marketing, insurance, professional services, changes in fair value of contingent payments, and depreciation/amortization[113] - Prior to the IPO, share-based compensation was a liability, but post-IPO, it primarily represents equity-based awards (Class B common stock and restricted stock units)[114][116] Results of Operations for the Three and Six Months Ended June 30, 2024 and 2025 This section provides a detailed comparative analysis of the company's financial performance for the three and six months ended June 30, 2024 and 2025 Revenue This section analyzes the drivers of revenue growth, distinguishing between contributions from acquisitions and organic expansion Revenue Performance (in thousands) | Period | 2024 | 2025 | Change (Absolute) | Change (%) | | :-------------------- | :----------- | :----------- | :---------------- | :--------- | | Three Months Ended June 30 | $300,037 | $344,334 | $44,297 | 14.8% | | Six Months Ended June 30 | $575,447 | $673,642 | $98,195 | 17.1% | - The increase in revenue was driven by $9.9 million (three months) and $30.1 million (six months) from acquisitions, and $34.4 million (three months) and $68.1 million (six months) from organic growth[123][124] - Organic growth was supported by an increase in residents served (from 174,000 to 195,000) and prescriptions dispensed (from 6.2 million to 7.0 million for Q2, and 12.0 million to 13.7 million for YTD), along with annual drug price inflation[123][124] Cost of Goods Sold This section examines the changes in cost of goods sold, attributing increases to both acquisitions and organic growth, and noting its percentage of revenue Cost of Goods Sold Performance (in thousands) | Period | 2024 | 2025 | Change (Absolute) | Change (%) | Percentage of Revenue (2024) | Percentage of Revenue (2025) | | :-------------------- | :----------- | :----------- | :---------------- | :--------- | :--------------------------- | :--------------------------- | | Three Months Ended June 30 | $238,749 | $276,188 | $37,439 | 15.7% | 79.6% | 80.2% | | Six Months Ended June 30 | $459,058 | $541,147 | $82,089 | 17.9% | 79.8% | 80.3% | - The increase in cost of goods sold was due to $8.6 million (three months) and $27.4 million (six months) from acquisitions, and $28.8 million (three months) and $54.7 million (six months) from organic growth[126][127] - Cost of goods sold as a percentage of revenue increased slightly from 79.6% to 80.2% for the three months and from 79.8% to 80.3% for the six months ended June 30, 2025[125][126][127] Selling, General, and Administrative Expenses This section analyzes the changes in selling, general, and administrative expenses, attributing increases to employee headcount and share-based compensation Selling, General, and Administrative Expenses (in thousands) | Period | 2024 | 2025 | Change (Absolute) | Change (%) | Percentage of Revenue (2024) | Percentage of Revenue (2025) | | :-------------------- | :----------- | :----------- | :---------------- | :--------- | :--------------------------- | :--------------------------- | | Three Months Ended June 30 | $44,283 | $55,566 | $11,283 | 25.5% | 14.8% | 16.1% | | Six Months Ended June 30 | $91,451 | $106,910 | $15,459 | 16.9% | 15.9% | 15.9% | - The increase for the three months was driven by a $6.6 million increase in employee headcount (organic growth $5.2 million, acquisitions $1.4 million) and a $4.7 million increase in share-based compensation expense[128] - For the six months, the increase was due to a $12.8 million increase in employee headcount (organic growth $8.3 million, acquisitions $4.5 million) and a $2.7 million increase in share-based compensation expense[129] - As a percentage of revenue, SG&A increased from 14.8% to 16.1% for the three months, primarily due to share-based compensation, but remained stable at 15.9% for the six months[128][129] Interest Expense This section details the significant decrease in interest expense, primarily due to the absence of outstanding balances under the Credit Facility Interest Expense (in thousands) | Period | 2024 | 2025 | Change (Absolute) | Change (%) | | :-------------------- | :--------- | :--------- | :---------------- | :--------- | | Three Months Ended June 30 | $1,066 | $172 | $(894) | -83.9% | | Six Months Ended June 30 | $1,831 | $342 | $(1,489) | -81.3% | - The significant decrease in interest expense was due to having no outstanding balances under the Credit Facility during the three and six months ended June 30, 2025[130][131] Provision for Income Taxes This section explains the new provision for income taxes in 2025, a direct consequence of the company's corporate reorganization and IPO Provision for Income Taxes (in thousands) | Period | 2024 | 2025 | | :-------------------- | :--- | :--- | | Three Months Ended June 30 | $0 | $3,760 | | Six Months Ended June 30 | $0 | $7,593 | - Income tax expense was $3.8 million and $7.6 million for the three and six months ended June 30, 2025, respectively, compared to $0 in the prior year periods[133] - This change is due to the company becoming subject to corporate income taxes after the IPO, as prior periods' business was conducted through entities treated as partnerships for tax purposes[133] Adjusted EBITDA and Other Non-GAAP Financial Measures This section presents non-GAAP financial measures like Adjusted EBITDA and Adjusted EPS, used by management to evaluate core operating performance - The company presents Adjusted EBITDA, Adjusted EPS, and Adjusted SG&A as non-GAAP financial measures to evaluate core operating performance[134][138] - Adjusted EBITDA excludes interest, income taxes, depreciation, amortization, share-based compensation, acquisition accounting adjustments, certain legal/regulatory items, and financing-related activities[135] Adjusted EBITDA and Adjusted EPS (in thousands, except per share) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $15,848 | $8,827 | $22,943 | $18,100 | | EBITDA | $21,788 | $18,008 | $34,399 | $36,379 | | Adjusted EBITDA | $21,676 | $24,952 | $41,931 | $48,385 | | Adjusted EBITDA as a percentage of revenue | 7.2% | 7.2% | 7.3% | 7.2% | | Diluted EPS | N/A | $0.14 | N/A | $0.29 | | Adjusted EPS | N/A | $0.23 | N/A | $0.47 | - Adjusted EBITDA increased by 15.1% for the three months and 15.4% for the six months ended June 30, 2025, while remaining stable as a percentage of revenue at approximately 7.2%[142] Liquidity and Capital Resources This section assesses the company's ability to meet its financial obligations, detailing cash position, credit facilities, and expected cash flow sufficiency - As of June 30, 2025, the company had $18.8 million in cash and cash equivalents[144] - The Credit Facility with Regions Bank was amended in May 2024, extending its maturity to April 23, 2027, and providing a $40 million line of credit with the ability to increase to $75 million[145] - As of June 30, 2025, there were no outstanding principal amounts under the Term Loan or borrowings under the line of credit[146] - Management believes existing cash, expected cash flows from operations, and the Credit Facility are sufficient to meet working capital and capital expenditure needs for the foreseeable future[146] Net Cash Flows This section provides a detailed breakdown of cash flows from operating, investing, and financing activities, highlighting significant changes between periods Net Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2024 | 2025 | Change (Absolute) | | :-------------------- | :---------- | :---------- | :---------------- | | Operating activities | $37,787 | $37,486 | $(301) | | Investing activities | $(16,702) | $(18,549) | $(1,847) | | Financing activities | $(20,299) | $(4,780) | $15,519 | - Net cash provided by operating activities decreased slightly by $0.3 million, primarily due to decreases in other current liabilities (income tax payments) and accounts payable, offset by increases in accrued compensation[150] - Net cash used in investing activities increased by $1.8 million, mainly due to a $3.4 million increase in property and equipment purchases, partially offset by $1.3 million less cash paid for acquisitions[152] - Net cash used in financing activities decreased by $15.5 million, primarily due to a $31.5 million decrease in distributions to equity holders, partially offset by a $15.0 million decrease in borrowings from notes payable[154] Critical Accounting Policies and Estimates This section affirms that the company's financial statements adhere to GAAP, involving estimates and judgments, with no material changes to policies since December 31, 2024 - The company's consolidated financial statements are prepared in accordance with GAAP, requiring estimates and judgments that can affect reported amounts[155] - There were no material changes to critical accounting policies since December 31, 2024[156] Recent Accounting Pronouncements This section directs readers to Note 2 for comprehensive details on recently adopted and not-yet-adopted accounting pronouncements - Refer to Note 2 of the consolidated financial statements for details on accounting pronouncements adopted and not yet adopted[157] JOBS Act Accounting Election This section states the company's election to use the extended transition period for new accounting standards as an Emerging Growth Company under the JOBS Act - The company has elected to use the extended transition period for complying with new or revised accounting standards as an Emerging Growth Company (EGC) under the JOBS Act[159] - The company could remain an EGC until the fifth anniversary of its IPO, or until certain revenue, market value, or debt issuance thresholds are met[160] Item 3. Quantitative and Qualitative Disclosure about Market Risk This section discusses the company's exposure to market risks, primarily focusing on interest rate sensitivities and their potential impact on financial condition and results of operations Interest Rate Risk This section identifies interest rate sensitivity as the company's primary market risk, detailing its cash position and the expected impact of rate changes - The company's primary market risk exposure is interest rate sensitivity, affecting interest income on cash and cash equivalents[161] - As of June 30, 2025, cash and cash equivalents totaled $18.8 million[161] - A hypothetical 100 basis point increase or decrease in interest rates is not expected to have a material impact on the company's financial condition or results of operations[161] Item 4. Controls and Procedures This section details the management's evaluation of the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms management's conclusion that the company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance of timely and accurate reporting - As of June 30, 2025, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were designed and effective to provide reasonable assurance of timely and accurate reporting[162][163] - Management acknowledges that no controls can provide absolute assurance and judgment is applied in evaluating benefits versus costs[164] Changes in Internal Control over Financial Reporting This section reports that no material changes occurred in internal control over financial reporting during the three and six months ended June 30, 2025 - During the three and six months ended June 30, 2025, there were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[165] Part II. Other Information This part covers additional information not included in the financial statements, such as legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section addresses the company's involvement in legal proceedings and claims arising in the ordinary course of business - The company is not currently aware of any legal proceedings or claims that are believed to have a material adverse effect on its business, financial condition, or results of operations[167] Item 1A. Risk Factors This section refers investors to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K and confirms no material changes - Investing in Class A common stock involves a high degree of risk, and investors should carefully consider the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2024[169] - There have been no material changes to the risk factors described in the Annual Report on Form 10-K[169] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the use of proceeds from the company's Initial Public Offering (IPO) and the share repurchase activity related to the May 2025 follow-on offering - No recent sales of unregistered securities occurred[170] - Net proceeds from the September 2024 IPO totaled $119.8 million, used to fund $55.2 million for merger consideration in the Corporate Reorganization and $20.0 million to repay credit facility borrowings, with the balance for general corporate purposes[171] - In May 2025, the company repurchased 1,440,447 shares of Class A common stock at an average price of $20.16 per share, using proceeds from a follow-on offering, which were then cancelled, resulting in no change to total outstanding Class A common stock[172][173] Item 3. Defaults Upon Senior Securities This section confirms whether there have been any defaults upon senior securities - There were no defaults upon senior securities[174] Item 4. Mine Safety Disclosures This section indicates the applicability of mine safety disclosures to the company - Mine safety disclosures are not applicable to the company[175] Item 5. Other Information This section provides information on other matters, specifically Rule 10b5-1 trading plans - During the quarter ended June 30, 2025, none of the company's directors and officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[176] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including agreements, certifications, and XBRL-related documents - Exhibits include the Agreement and Plan of Merger, Amended and Restated Certificate of Incorporation and Bylaws, Form of Stock Purchase Agreement, and various certifications (e.g., Rule 13a-14(a), 18 U.S.C. Section 1350)[178] - XBRL Taxonomy documents (Schema, Calculation, Definition, Label, Presentation Linkbase) and the Cover Page Interactive Data File are also included[179] Signatures This section contains the official signatures, certifying the due authorization and filing of the report Signatures This section contains the official signatures, certifying the due authorization and filing of the report - The report was signed on August 11, 2025, by David K. Morris, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of Guardian Pharmacy Services, Inc[182]