Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-41315 John Marshall Bancorp, Inc. (Exact name of registrant as specified in its charter) Virginia 81-5424879 ( ...

[Business and Operational Highlights](index=1&type=section&id=Business%20and%20Operational%20Highlights) The company achieved record Q2 2025 performance, capitalizing on consumer wellness trends and reinforcing its kefir market leadership - Lifeway was named **Processor of the Year** by Dairy Foods magazine, the publication's highest annual honor, recognizing the Company's innovation and leadership[3](index=3&type=chunk) - The company is capitalizing on powerful consumer tailwinds, including the wellness boom and the surge in **GLP-1 medication use**, by offering nutrient-dense, protein-rich, probiotic foods[2](index=2&type=chunk) [Q3 2025 Momentum and Outlook](index=1&type=section&id=Q3%202025%20Momentum%20and%20Outlook) The company reports strong sales momentum entering Q3 and reiterates its long-term financial targets for 2027 - Unaudited net sales for Q3 to date reached **$26.4 million**, an increase of more than **20%** year-over-year[1](index=1&type=chunk)[5](index=5&type=chunk) - In July, Lifeway recorded the **highest single week of gross sales** in Company history, surpassing **$5.5 million**[5](index=5&type=chunk) - The Company reiterated its long-term target of **$45–$50 million in Adjusted EBITDA for FY 2027** and expects record annual sales in 2025[7](index=7&type=chunk) [Growth Trends and Innovation](index=1&type=section&id=Growth%20Trends%20and%20Innovation) The company's innovative collagen-infused smoothies are capitalizing on the growing 'beauty from within' trend - Lifeway's Probiotic Smoothies with Collagen are resonating with consumers, tapping into the rapidly growing **$8 billion global market for collagen**[4](index=4&type=chunk) - The Berry Blast flavor of the collagen smoothie won a **2025 Good Housekeeping Snack Award**, highlighting the product's success and consumer appeal[4](index=4&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) The company delivered record Q2 2025 net sales with expanded gross profit margin and net income growth Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $53.9M | $49.2M | +9.7% | | Gross Profit Margin | 28.6% | 27.0% | +160 bps | | Net Income | $4.2M | $3.8M | +10.5% | | Diluted EPS | $0.28 | $0.25 | +12.0% | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net sales grew 9.7% in Q2 2025, driving higher gross profit and net income despite increased operating expenses Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $53,901 | $49,157 | | Gross profit | $15,400 | $13,275 | | Income from operations | $5,795 | $5,386 | | Net income | $4,249 | $3,783 | | Diluted EPS | $0.28 | $0.25 | Six Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $99,992 | $93,791 | | Gross profit | $26,435 | $24,810 | | Income from operations | $7,369 | $8,950 | | Net income | $7,789 | $6,209 | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets and stockholders' equity increased, driven by a significant rise in cash and cash equivalents Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,220 | $16,728 | | Total current assets | $49,331 | $43,605 | | Total assets | $98,267 | $90,547 | | Total current liabilities | $16,289 | $15,504 | | Total liabilities | $19,571 | $18,636 | | Total stockholders' equity | $78,696 | $71,911 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by $4.5 million, supported by strong proceeds from investing activities despite lower operating cash flow Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,762 | $8,090 | | Net cash provided by (used in) investing activities | $795 | $(3,905) | | Net cash used in financing activities | $(65) | $(2,750) | | **Net increase in cash** | **$4,492** | **$1,435** | [Other Information](index=2&type=section&id=Other%20Information) This section details the non-GAAP financial measure Adjusted EBITDA and outlines forward-looking statement risks [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes the non-GAAP measure Adjusted EBITDA for its outlook and cannot reconcile it to GAAP net income - **Adjusted EBITDA** is a non-GAAP measure defined as Operating Income, as reported, plus Depreciation and Amortization, plus Stock-Based Compensation[7](index=7&type=chunk)[11](index=11&type=chunk) - The Company cannot reconcile its target fiscal year **2027 Adjusted EBITDA** to projected net income without unreasonable effort due to uncertainty[12](index=12&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to risks including competition, pricing, and an unsolicited acquisition proposal - The press release contains **forward-looking statements** that are subject to risks and uncertainties beyond the company's control[10](index=10&type=chunk) - Identified risks include price competition, commodity pricing, and uncertainty related to an **unsolicited acquisition proposal from Danone**[10](index=10&type=chunk)

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited H1 2025 financial statements show total assets decreased to $848.4 million, while revenues surged to $100.4 million and net income reached $23.0 million [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $848.4 million, primarily due to a drop in cash, while total liabilities also decreased to $426.8 million Consolidated Balance Sheet Summary ($ Thousands) | Balance Sheet Item | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $74,837 | $131,944 | | Life settlement policies, at fair value | $386,145 | $370,398 | | Goodwill | $238,921 | $238,296 | | **Total Assets** | **$848,358** | **$874,165** | | **Liabilities & Equity** | | | | Current portion of long-term debt, at fair value | $117,870 | $37,430 | | Long-term debt, net | $224,896 | $224,742 | | **Total Liabilities** | **$426,825** | **$450,870** | | **Total Stockholders' Equity** | **$416,533** | **$423,295** | - Cash and cash equivalents decreased by **$57.1 million**, from **$131.9 million** at the end of 2024 to **$74.8 million** as of June 30, 2025[5](index=5&type=chunk) - The current portion of long-term debt measured at fair value increased significantly to **$117.9 million** from **$37.4 million**, reflecting upcoming maturities, including the LMAIS II redemption window opening in March 2026[5](index=5&type=chunk)[33](index=33&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Q2 2025 total revenues surged to $56.2 million, driving net income to $17.6 million, while H1 2025 revenues doubled to $100.4 million, resulting in $23.0 million net income Key Performance Indicators (Q2 2025 vs Q2 2024, $M) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $56.2 | $29.1 | +93.4% | | Gross Profit | $50.2 | $26.3 | +90.8% | | Operating Income | $22.5 | $6.8 | +232.3% | | Net Income | $17.6 | $0.7 | +2414.3% | | Diluted EPS | $0.18 | $0.01 | +1700% | Key Performance Indicators (Six Months Ended June 30, $M) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $100.4 | $50.6 | +98.4% | | Gross Profit | $87.2 | $45.1 | +93.4% | | Operating Income | $43.5 | $9.0 | +383.3% | | Net Income (Loss) | $23.0 | ($0.6) | NM | | Diluted EPS | $0.23 | ($0.01) | NM | [Consolidated Statements of Mezzanine Equity and Stockholders' Equity](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Mezzanine%20Equity%20and%20Stockholders%27%20Equity) During H1 2025, total stockholders' equity decreased to $416.5 million due to common stock repurchases, partially offset by net income and preferred stock issuance - The company repurchased **5,081,477 shares** of common stock for **$35.1 million** during the second quarter of 2025[10](index=10&type=chunk) - Issued **5,000 shares** of Series A Convertible Preferred Stock for **$5.0 million**, classified as mezzanine equity[10](index=10&type=chunk) - Net income attributable to the company of **$22.2 million** for the six months ended June 30, 2025, increased retained earnings (reduced accumulated deficit)[8](index=8&type=chunk)[10](index=10&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, net cash provided by operating activities was $14.5 million, a significant improvement from the prior year, while financing activities used $57.9 million, resulting in a net cash decrease of $57.1 million Cash Flow Summary (Six Months Ended June 30, $M) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from Operating Activities | $14.5 | ($64.5) | | Net cash from Investing Activities | ($13.7) | ($0.7) | | Net cash from Financing Activities | ($57.9) | $131.0 | | **Net Change in Cash** | **($57.1)** | **$65.7** | - Financing activities in H1 2025 included **$35.1 million** for common stock repurchases and a net debt repayment of **$21.9 million**, contrasting with **$92.0 million** raised from a common stock sale in H1 2024[15](index=15&type=chunk) [Condensed Notes to Consolidated Financial Statements](index=12&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, recent business combinations like the NIB acquisition, revenue disaggregation, and segment reporting changes, including a subsequent warrant exchange offer - On April 24, 2025, the Company acquired National Insurance Brokerage, LLC ("NIB") for approximately **$2.1 million** in cash, recognizing **$0.7 million** in goodwill assigned to the Life Solutions segment[49](index=49&type=chunk)[51](index=51&type=chunk) - In Q1 2025, the company updated its structure to three reportable segments: Asset Management, Life Solutions, and Technology Services, reflecting how management now reviews the business[81](index=81&type=chunk) - Subsequent to the quarter end, on June 30, 2025, the company commenced an exchange offer to redeem all outstanding Public and Private Placement Warrants for common stock[181](index=181&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes significant H1 2025 revenue and profit growth to successful acquisitions and strong segment performance, with Q2 Adjusted EBITDA reaching $31.5 million and sufficient liquidity [Results of Operations](index=52&type=section&id=Results%20of%20Operations) For Q2 2025, total revenue increased 93.4% to $56.2 million, driven by surges in Asset Management and Life Solutions revenue, leading to a 232% increase in operating income to $22.5 million - Asset management revenue for Q2 2025 increased by **$8.6 million**, or **4176.4%**, primarily due to the Carlisle and FCF acquisitions completed in December 2024[189](index=189&type=chunk) - Life solutions revenue for Q2 2025 grew by **$18.4 million**, or **63.8%**, mainly from a **$49.6 million** increase in realized gains from life policies, partially offset by changes in unrealized gains and premiums paid[191](index=191&type=chunk) - General and administrative expenses for Q2 2025 increased by **$4.4 million** (**30.0%**), driven by higher legal/professional fees and payroll related to acquisitions, though partially offset by lower stock-based compensation expense[203](index=203&type=chunk) [Segment Results](index=62&type=section&id=Results%20of%20Operations%E2%80%94Segment%20Results) For Q2 2025, Asset Management gross profit skyrocketed due to acquisitions, Life Solutions gross profit increased 70.3%, while the new Technology Services segment reported a gross loss Segment Gross Profit (Q2 2025 vs Q2 2024) | Segment | Q2 2025 Gross Profit | Q2 2024 Gross Profit | Change | | :--- | :--- | :--- | :--- | | Asset Management | $5,714,783 | $36,217 | +15679.3% | | Life Solutions | $44,790,299 | $26,296,351 | +70.3% | | Technology Services | ($335,106) | $0 | NM | [Non-GAAP Financial Measures and Key Business Metrics](index=64&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Key%20Business%20Metrics) The company reported Q2 2025 non-GAAP Adjusted Net Income of $21.9 million and Adjusted EBITDA of $31.5 million, driven by a 303% increase in life policies sold and Assets Under Management reaching $2.87 billion Non-GAAP Reconciliation Summary (Q2 2025 vs Q2 2024, $M) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income Attributable to Co. | $17.6 | $0.8 | | Adjusted Net Income | $21.9 | $11.7 | | Adjusted EPS - Diluted | $0.22 | $0.17 | | Adjusted EBITDA | $31.5 | $16.7 | - The number of life policies sold under the fair value method increased dramatically to **399** in Q2 2025 from **99** in Q2 2024, a **303%** increase[261](index=261&type=chunk) - As of June 30, 2025, Assets Under Management (AUM) reached **$2.87 billion**, a key driver for the Asset Management segment[264](index=264&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $74.8 million in cash and cash equivalents, with management believing current liquidity is sufficient for the next 12 months, following $35.1 million in stock repurchases during H1 2025 - The company's principal source of liquidity as of June 30, 2025, was cash and cash equivalents of **$74.8 million**[267](index=267&type=chunk) - The Board of Directors has authorized stock repurchase plans totaling **$50 million**, with **$2.9 million** remaining available for repurchases as of June 30, 2025[269](index=269&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=80&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and is not required to provide the information for this item - As a smaller reporting company, Abacus is exempt from providing quantitative and qualitative disclosures about market risk[280](index=280&type=chunk) [Controls and Procedures](index=80&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[281](index=281&type=chunk) - No material changes were identified in the company's internal control over financial reporting during the three months ended June 30, 2025[282](index=282&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any litigation that would be considered material to its ongoing operations as of June 30, 2025 - As of the period ended June 30, 2025, the Company is not involved in any material legal proceedings[283](index=283&type=chunk) [Risk Factors](index=81&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have occurred as of the date of this report[284](index=284&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section refers to Note 15 of the financial statements for details regarding the company's stock repurchase program and activities during the first six months of 2025 - Information regarding the company's stock repurchase program and shares repurchased during the period is detailed in Note 15 of the financial statements[285](index=285&type=chunk) [Other Information](index=81&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, no company officers or directors adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - No officers or directors adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[286](index=286&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements detail the company's financial position and performance [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets show a decrease in total assets and a shift in liabilities from long-term to current Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :-------------------------- | :------------------ | | **Assets** | | | | Cash and cash equivalents | $74,836,871 | $131,944,282 | | Total current assets | $105,920,010 | $159,564,646 | | Life settlement policies, at fair value | $386,144,698 | $370,398,447 | | TOTAL ASSETS | $848,357,920 | $874,164,752 | | **Liabilities & Equity** | | | | Current portion of long-term debt, at fair value | $117,869,504 | $37,430,336 | | Total current liabilities | $140,178,035 | $62,466,079 | | TOTAL LIABILITIES | $426,824,728 | $450,870,080 | | TOTAL STOCKHOLDERS' EQUITY | $416,533,192 | $423,294,672 | [Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) The statements of operations reflect significant year-over-year growth in revenue and net income Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------------ | :----------- | :--------- | | TOTAL REVENUES | $56,224,620 | $29,076,102 | | GROSS PROFIT | $50,169,976 | $26,332,568 | | OPERATING INCOME | $22,519,595 | $6,770,770 | | NET INCOME (LOSS) | $17,610,929 | $651,749 | | NET INCOME (LOSS) ATTRIBUTABLE TO ABACUS GLOBAL MANAGEMENT, INC. | $17,583,689 | $769,983 | | Earnings (loss) per share - basic | $0.18 | $0.01 | | Earnings (loss) per share - diluted | $0.18 | $0.01 | Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------------ | :------------ | :---------- | | TOTAL REVENUES | $100,363,966 | $50,563,286 | | GROSS PROFIT | $87,200,915 | $45,098,855 | | OPERATING INCOME | $43,546,559 | $9,023,899 | | NET INCOME (LOSS) | $23,009,955 | $(623,722) | | NET INCOME (LOSS) ATTRIBUTABLE TO ABACUS GLOBAL MANAGEMENT, INC. | $22,223,272 | $(578,762) | | Earnings (loss) per share - basic | $0.23 | $(0.01) | | Earnings (loss) per share - diluted | $0.23 | $(0.01) | [Unaudited Consolidated Statements of Mezzanine Equity and Stockholders' Equity](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Mezzanine%20Equity%20and%20Stockholders'%20Equity) Stockholders' equity decreased due to significant treasury stock repurchases offsetting net income Stockholders' Equity Changes (Six Months Ended June 30, 2025) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :------------------ | :------------ | | Total Stockholders' Equity | $423,294,672 | $416,533,192 | | Shares Issued (Class A Common Stock) | 96,731,194 | 97,954,471 | | Treasury Stock (Shares) | (1,048,226) | (6,129,703) | | Treasury Stock (Amount) | $(12,025,137) | $(47,076,918) | | Accumulated Deficit | $(57,896,606) | $(35,767,080) | - The Company repurchased **5,081,477 common shares for $35,051,781** during the period from March 31, 2025 to June 30, 2025[10](index=10&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows show a significant positive shift in operations but a large outflow from financing activities Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :------------------------------------------ | :------------ | :------------ | | Net cash provided by (used in) operating activities | $14,511,602 | $(64,542,510) | | Net cash used in investing activities | $(13,743,342) | $(716,113) | | Net cash (used in) provided by financing activities | $(57,875,671) | $130,993,784 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(57,107,411) | $65,735,161 | | Cash, cash equivalents, and restricted cash at end of period | $74,836,871 | $91,323,829 | - Operating activities shifted from a **net cash outflow of $64.5 million** in 2024 to a **net cash inflow of $14.5 million** in 2025, primarily due to increased net life settlement sales and net income[14](index=14&type=chunk)[15](index=15&type=chunk) - Financing activities saw a significant decrease in cash provided, moving from **$131.0 million** in 2024 to a **net cash outflow of $57.9 million** in 2025, mainly due to decreased stock issuance proceeds, increased share repurchases, and debt repayments[14](index=14&type=chunk)[15](index=15&type=chunk) [Condensed Notes to Consolidated Financial Statements](index=12&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, business combinations, and segment performance [1. Basis of Presentation](index=12&type=section&id=1.%20BASIS%20OF%20PRESENTATION) The interim financial statements are prepared in accordance with SEC rules and U.S. GAAP - The interim financial statements are prepared in accordance with SEC rules and U.S. GAAP, condensing certain disclosures normally found in the annual 10-K report[16](index=16&type=chunk) - The Company consolidates all entities where it has a controlling voting interest or is the primary beneficiary of variable interest entities (VIEs)[17](index=17&type=chunk) [2. Significant Accounting Policies and Recent Accounting Standards](index=12&type=section&id=2.%20SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20RECENT%20ACCOUNTING%20STANDARDS) The Company has not early adopted new accounting standards and is evaluating recent tax law changes - The Company has chosen not to early adopt new accounting standards ASU 2025-03 (Business Combinations), ASU 2025-04 (Stock Compensation), and ASU 2025-05 (Credit Losses), none of which are expected to have a significant impact upon adoption[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The One Big Beautiful Bill Act (OBBB) was signed into law on July 4, 2025, modifying U.S. tax code, and the Company is currently evaluating its financial impact[25](index=25&type=chunk) - Net income (loss) per share is computed using the two-class method for participating securities, including redeemable convertible preferred stock and common stock[26](index=26&type=chunk)[27](index=27&type=chunk) - One related party customer accounted for **26% of total revenue** for the three months ended June 30, 2025, and **15%** for the six months ended June 30, 2025[31](index=31&type=chunk) [3. Business Combinations](index=14&type=section&id=3.%20BUSINESS%20COMBINATIONS) The Company completed three strategic acquisitions, significantly expanding its Asset Management and Life Solutions segments - The Company completed three acquisitions: **Carlisle Management Company S.C.A.** (Asset Management segment, Dec 2024), **FCF Advisors, LLC** (Asset Management segment, Dec 2024), and **National Insurance Brokerage, LLC** (Life Solutions segment, April 2025)[36](index=36&type=chunk)[44](index=44&type=chunk)[49](index=49&type=chunk) Carlisle Acquisition Details (December 2, 2024) | Metric | Fair Value | | :------------------------------------------ | :----------- | | Intangibles | $51,700,000 | | Net assets acquired | $51,953,965 | | Goodwill | $93,745,891 | | Total purchase price | $145,699,856 | | Consideration (Fixed Rate Senior Unsecured Notes) | ~$72.7 million | | Consideration (Common Stock) | ~$73.0 million (9.2 million shares) | FCF Acquisition Details (December 2, 2024) | Metric | Finalized Fair Value | | :------------------------------------------ | :------------------- | | Intangibles | $5,300,000 | | Net assets acquired | $5,726,476 | | Goodwill | $4,558,285 | | Total purchase price | $10,284,761 | | Consideration (Cash, net of cash acquired) | ~$10.2 million | | Consideration (Common Stock) | ~$4.6 million (0.6 million shares) | NIB Acquisition Details (April 24, 2025) | Metric | Finalized Fair Value | | :------------------------------------------ | :------------------- | | Intangibles | $1,393,300 | | Net assets acquired | $2,313,258 | | Goodwill | $686,742 | | Total purchase price | $3,000,000 | | Consideration (Cash, net of cash acquired) | ~$2.1 million | [4. Revenues](index=18&type=section&id=4.%20REVENUES) Revenue growth was driven by acquisitions in Asset Management and strong performance in Life Solutions Disaggregated Revenue (Three Months Ended June 30) | Revenue Source | 2025 | 2024 | | :-------------------- | :----------- | :----------- | | Asset management | $8,761,876 | $204,888 | | Life solutions | $47,300,844 | $28,871,214 | | Technology services | $161,900 | $0 | | TOTAL REVENUES | $56,224,620 | $29,076,102 | Disaggregated Revenue (Six Months Ended June 30) | Revenue Source | 2025 | 2024 | | :-------------------- | :------------ | :----------- | | Asset management | $16,534,953 | $422,823 | | Life solutions | $83,599,501 | $50,140,463 | | Technology services | $229,512 | $0 | | TOTAL REVENUES | $100,363,966 | $50,563,286 | - Asset management revenue significantly increased due to the **Carlisle and FCF acquisitions**[55](index=55&type=chunk) - Life solutions revenue increased, driven by **realized and unrealized gains** from life insurance policies[55](index=55&type=chunk) [5. Life Settlement Policies](index=20&type=section&id=5.%20LIFE%20SETTLEMENT%20POLICIES) The company's life settlement portfolio decreased in policy count but increased in fair value Life Settlement Policies Held (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total policies held | 600 | 719 | | Policies at fair value | 595 | 714 | | Aggregate face value (fair value method) | $1,138,815,252 | $1,295,788,355 | | Fair value (fair value method) | $386,144,698 | $370,398,447 | | Policies at investment method (cost + premiums) | 5 | 5 | | Aggregate face value (investment method) | $2,225,000 | $2,225,000 | | Carrying value (investment method) | $1,109,808 | $1,083,977 | - The Company held **600 life settlement policies** as of June 30, 2025, with the majority (595) accounted for using the fair value method[57](index=57&type=chunk) Estimated Future Premium Payments (Investment Method) as of June 30, 2025 | Year | Amount | | :------------- | :------- | | 2025 remaining | $35,378 | | 2026 | $64,043 | | 2027 | $60,235 | | 2028 | $27,866 | | 2029 | $8,002 | | Thereafter | $9,422 | | Total | $204,946 | [6. Property and Equipment—Net](index=23&type=section&id=6.%20PROPERTY%20AND%20EQUIPMENT—NET) Net property and equipment increased significantly due to asset additions and recent acquisitions Property and Equipment, Net (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Property and equipment—gross | $1,904,039 | $1,256,718 | | Less: accumulated depreciation | $(386,194) | $(231,652) | | Property and equipment—net | $1,517,845 | $1,025,066 | - Net property and equipment increased by **$492,779 (48.1%)** from December 31, 2024, to June 30, 2025[66](index=66&type=chunk) - Depreciation expense for the three months ended June 30, 2025, was **$87,716**, up from $44,418 in the prior year[66](index=66&type=chunk) [7. Goodwill and Other Intangible Assets](index=23&type=section&id=7.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Goodwill and intangible assets grew substantially following the completion of recent business acquisitions Goodwill by Reportable Segment (June 30, 2025) | Reportable Segment | December 31, 2024 | Additions | Adjustments | June 30, 2025 | | :----------------- | :------------------ | :-------- | :---------- | :------------ | | Life Solutions | $139,930,190 | $686,742 | $0 | $140,616,932 | | Asset Management | $98,366,010 | $0 | $(61,834) | $98,304,176 | | Total | $238,296,200 | $686,742 | $(61,834) | $238,921,108 | Intangible Assets Acquired (Fair Value) | Asset Type | Fair Value | | :-------------------------------- | :----------- | | Management agreements | $47,400,000 | | Customer relationships | $28,793,300 | | Non-compete agreements | $7,400,000 | | Internally developed and used technology | $2,100,000 | | Trade Name (definite-lived) | $2,000,000 | | State Insurance Licenses (indefinite-lived) | $2,700,000 | | Trade Name (indefinite-lived) | $900,000 | | Total | $91,293,300 | - Amortization expense for definite-lived intangible assets was **$4,667,987** for the three months ended June 30, 2025, a significant increase from $1,682,083 in the prior year, primarily due to recent acquisitions[68](index=68&type=chunk) [8. Available-for-Sale Securities, at Fair Value](index=26&type=section&id=8.%20AVAILABLE-FOR-SALE%20SECURITIES,%20AT%20FAIR%20VALUE) The value of available-for-sale securities, consisting of convertible notes, increased during the period - The Company holds convertible promissory notes in two unrelated entities, valued at **$3,287,463** as of June 30, 2025, up from $2,205,904 at December 31, 2024[71](index=71&type=chunk) - These notes are accounted for using the available-for-sale method, with fair value approximating carrying value, and no unrealized gains/losses or credit losses recorded since inception[72](index=72&type=chunk) Interest Income from Convertible Promissory Notes | Period | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | Three months ended June 30 | $44,125 | $19,945 | | Six months ended June 30 | $81,559 | $59,640 | [9. Other Investments and Other Assets](index=26&type=section&id=9.%20OTHER%20INVESTMENTS%20AND%20OTHER%20ASSETS) Other investments and assets grew substantially due to a new note receivable and equity investments - Other investments, including convertible preferred and common stock in unrelated entities, increased to **$9,850,000** as of June 30, 2025, from $1,850,000 at December 31, 2024[73](index=73&type=chunk) - A **$7,000,000 note receivable** was recorded in April 2025 from an unrelated party, maturing in April 2028, with 25% paid-in-kind lender fees of $1,750,000 added to the principal[77](index=77&type=chunk) Other Assets (June 30, 2025 vs. December 31, 2024) | Asset Type | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Note receivable | $8,986,197 | $0 | | Restricted cash deposits | $1,856,113 | $1,837,813 | | Total other assets | $10,845,818 | $1,851,845 | [10. Consolidation of Variable Interest Entities](index=27&type=section&id=10.%20CONSOLIDATION%20OF%20VARIABLE%20INTEREST%20ENTITIES) The Company consolidates several VIEs where it is the primary beneficiary and manages others as related parties - The Company consolidates VIEs where it is the primary beneficiary, including LMA Income Series II LP, LMX Series LLC, and LMA Income Series, LP[79](index=79&type=chunk) Consolidated VIEs Assets and Liabilities | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Total assets | $166,887,084 | $169,322,167 | | Total liabilities | $119,258,043 | $143,200,287 | - New LP Funds (Abacus Enhanced Income Fixed LP, etc) established in 2025 are not consolidated as the Company does not have a controlling financial interest, leading to related party activities for policy sales and fees[80](index=80&type=chunk) [11. Segment Reporting](index=27&type=section&id=11.%20SEGMENT%20REPORTING) The Company reorganized into three reportable segments, with Asset Management showing substantial growth - The Company updated its business organization into three reportable segments: **Asset Management, Life Solutions, and Technology Services**, effective Q1 2025[81](index=81&type=chunk) Revenue by Reportable Segment (Six Months Ended June 30) | Segment | 2025 | 2024 | | :---------------- | :------------ | :----------- | | Asset Management | $16,534,953 | $422,823 | | Life Solutions | $83,599,501 | $50,140,463 | | Technology Services | $229,512 | $0 | | Total Revenue | $100,363,966 | $50,563,286 | Gross Profit by Reportable Segment (Six Months Ended June 30) | Segment | 2025 | 2024 | | :---------------- | :----------- | :----------- | | Asset Management | $10,745,842 | $(108,240) | | Life Solutions | $77,188,097 | $45,207,095 | | Technology Services | $(733,024) | $0 | | Total Gross Profit | $87,200,915 | $45,098,855 | - Asset Management revenue and gross profit saw substantial growth, while Technology Services generated revenue but incurred a gross loss in 2025[87](index=87&type=chunk)[88](index=88&type=chunk) [12. Commitments and Contingencies](index=29&type=section&id=12.%20COMMITMENTS%20AND%20CONTINGENCIES) The Company reports no material legal proceedings and notes the upcoming expiration of a key service agreement - The Company is not aware of any material legal proceedings that would adversely affect its business, financial position, results of operations, or cash flows[91](index=91&type=chunk) - An additional commitment of **$1,000,000** exists to purchase convertible promissory notes from one investee[92](index=92&type=chunk) - The Strategic Services and Expenses Support Agreement (SSES) with Providers will expire at the end of 2025 and will not be renewed[93](index=93&type=chunk) [13. Fair Value Measurements](index=30&type=section&id=13.%20FAIR%20VALUE%20MEASUREMENTS) Assets and liabilities measured at fair value primarily use significant unobservable (Level 3) inputs - All assets and liabilities measured at fair value are categorized as **Level 3 inputs**, indicating significant unobservable inputs[96](index=96&type=chunk) Assets and Liabilities Measured at Fair Value (June 30, 2025) | Item | Fair Value (Level 3) | | :------------------------------------------ | :------------------- | | Life settlement policies, at fair value | $386,144,698 | | Available-for-sale securities, at fair value | $3,287,463 | | Current portion of long-term debt, at fair value | $117,869,504 | | Private Placement Warrants | $9,968,000 | - Life settlement policies are valued using a discounted cash flow (DCF) model with Monte Carlo simulation, incorporating risk-based discount rates, historical trade spreads, risk scores, and life expectancy[97](index=97&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - A **1% increase in the discount rate** would decrease the fair value of policies by **$13.7 million**, while a **1% decrease** would increase it by **$12.8 million**[106](index=106&type=chunk) - The fair value of long-term debt (LMATT notes) was determined using the Black-Scholes-Merton option-pricing formula and discounted cash flow analysis, with the last LMATT note paid off in January 2025[107](index=107&type=chunk) [14. Long-Term Debt](index=37&type=section&id=14.%20LONG-TERM%20DEBT) The Company's debt profile changed with new credit facilities and note issuances for acquisitions Outstanding Principal Balances of Long-Term Debt (June 30, 2025 vs. December 31, 2024) | Debt Type | June 30, 2025 (Cost) | December 31, 2024 (Cost) | | :------------------------------------------ | :------------------- | :----------------------- | | Senior Secured Credit Facility | $99,500,000 | $100,000,000 | | LMA Income Series II, LP | $118,587,332 | $105,856,422 | | Fixed Rate Senior Unsecured Notes | $133,377,075 | $133,377,075 | | Sponsor PIK Note | $13,296,214 | $12,525,635 | | Total debt | $357,061,279 | $377,455,997 | | Less current portion of long-term debt | $(118,869,504) | $(34,068,233) | | Total long-term debt | $238,191,775 | $343,387,764 | - The Company issued an additional **$72,727,075 in Fixed Rate Senior Unsecured Notes** in December 2024 as consideration for the Carlisle Acquisition[118](index=118&type=chunk) - The Senior Secured Credit Facility, entered into in December 2024, provides an initial **$100 million term loan** and up to **$50 million in delayed draw term loans**, maturing in December 2030[119](index=119&type=chunk)[120](index=120&type=chunk) - The LMATT Series 2024 market-indexed notes were fully extinguished in January 2025 with a payment of **$11,229,560**[125](index=125&type=chunk) - The Sponsor PIK Note's outstanding principal balance increased due to accrued non-cash interest expense, reaching **$13,296,214** as of June 30, 2025[139](index=139&type=chunk) [15. Convertible Preferred Stock and Stockholders' Equity](index=41&type=section&id=15.%20CONVERTIBLE%20PREFERRED%20STOCK%20AND%20STOCKHOLDERS'%20EQUITY) The Company issued new preferred stock and significantly increased its stock repurchase program - The Company issued **5,000 shares of Series A Convertible Preferred Stock** in March 2025 with a **$5,000,000 aggregate liquidation preference**, classified as mezzanine equity due to holder redemption rights upon change of control[143](index=143&type=chunk) - As of June 30, 2025, there were **97,954,471 common shares issued**, with 91,824,768 outstanding and 6,129,703 held as treasury stock[142](index=142&type=chunk) - The Board of Directors authorized additional stock repurchase programs totaling **$35,000,000** in April and June 2025, extending the program to December 2026, with **$2,923,082 remaining available**[152](index=152&type=chunk)[153](index=153&type=chunk) Stock Repurchase Activity (Six Months Ended June 30, 2025) | Period | Number of Shares Purchased | Total Cost | Average Price per Share | | :-------------------------- | :------------------------- | :----------- | :---------------------- | | As of December 31, 2024 | 1,048,226 | $12,025,137 | $11.61 | | April 1, 2025 to April 30, 2025 | 1,763,303 | $14,023,198 | $7.98 | | May 1, 2025 to May 31, 2025 | 477,223 | $4,083,214 | $8.57 | | June 1, 2025 to June 30, 2025 | 2,840,951 | $16,945,369 | $5.99 | | As of June 30, 2025 | 6,129,703 | $47,076,918 | $8.24 | [16. Stock-Based Compensation](index=43&type=section&id=16.%20STOCK-%20BASED%20COMPENSATION) Stock-based compensation expense decreased compared to the prior year, with significant unrecognized costs remaining - The Company grants Restricted Stock Units (RSUs) to executives, employees, and directors under its Long-Term Equity Compensation Incentive Plan, with vesting typically over three years[154](index=154&type=chunk) Stock-Based Compensation Expense | Period | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Three months ended June 30 | $3,486,829 | $6,165,459 | | Six months ended June 30 | $5,842,224 | $12,258,830 | - As of June 30, 2025, approximately **$26,404,842 of unrecognized compensation costs** related to RSUs and stock options is expected to be recognized over the next 2.3 years[159](index=159&type=chunk) [17. Employee Benefit Plan](index=46&type=section&id=17.%20EMPLOYEE%20BENEFIT%20PLAN) Expenses for the Company's 401(k) employee benefit plan increased year-over-year - The Company's 401(k) Plan includes a matching contribution of up to **4% of eligible employee compensation**[160](index=160&type=chunk) 401(k) Plan Expenses | Period | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | Three months ended June 30 | $197,685 | $90,716 | | Six months ended June 30 | $315,808 | $199,532 | [18. Income Taxes](index=46&type=section&id=18.%20INCOME%20TAXES) Income tax expense increased due to higher net income, while the effective tax rate decreased significantly Income Tax Expense and Effective Tax Rate | Period | Income Tax Expense (2025) | Effective Tax Rate (2025) | Income Tax Expense (2024) | Effective Tax Rate (2024) | | :-------------------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Three months ended June 30 | $4,069,971 | 18.8% | $1,757,710 | 73.0% | | Six months ended June 30 | $6,404,056 | 21.8% | $2,931,223 | 127.0% | - The increase in income tax expense for both periods is primarily driven by the **increase in net income**[161](index=161&type=chunk)[162](index=162&type=chunk) [19. Related-Party Transactions](index=46&type=section&id=19.%20RELATED-PARTY%20TRANSACTIONS) The Company engages in significant related-party transactions, including debt and policy sales with its funds - The Sponsor PIK Note of **$13,296,214** is recorded as a related party transaction[164](index=164&type=chunk) - Life policy sales to or purchases from the Carlisle Funds and LP Funds, along with management, performance, and servicing fees, are considered related party activities[165](index=165&type=chunk) Related Party Receivables (June 30, 2025 vs. December 31, 2024) | Receivable Type | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Current related party receivables (Carlisle Funds) | $10,989,251 | $6,772,072 | | Noncurrent related party receivables (Carlisle Funds) | $14,501,482 | $13,379,301 | - The Company recognized **$16,175,271 in realized and unrealized gains** from life policy sales to Carlisle Funds and LP Funds for the three months ended June 30, 2025[168](index=168&type=chunk) [20. Leases](index=47&type=section&id=20.%20LEASES) Operating lease assets and liabilities increased due to additional office space and recent acquisitions - The Company's operating lease right-of-use assets increased to **$4,867,682** as of June 30, 2025, from $4,722,573 at December 31, 2024, due to additional office space amendments and the Carlisle Acquisition[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) Operating Lease Liabilities (June 30, 2025 vs. December 31, 2024) | Liability Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Current operating lease liabilities | $646,851 | $515,597 | | Non-current operating lease liabilities | $4,713,328 | $4,580,158 | | Total lease liability | $5,360,179 | $5,095,755 | - Total lease cost for the three months ended June 30, 2025, was **$472,065**, up from $254,083 in the prior year[174](index=174&type=chunk) [21. Earnings (Loss) Per Share](index=48&type=section&id=21.%20EARNINGS%20(LOSS)%20PER%20SHARE) Earnings per share increased substantially, driven by a significant rise in net income Basic Earnings (Loss) Per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------------ | :----------- | :------- | | Net income (loss) attributable to common stockholders | $17,489,939 | $769,983 | | Weighted average shares outstanding—basic | 94,690,195 | 63,846,170 | | Basic earnings (loss) per share | $0.18 | $0.01 | Diluted Earnings (Loss) Per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------------ | :----------- | :------- | | Numerator used to calculate diluted earnings (loss) per share | $17,489,939 | $769,983 | | Weighted average shares for diluted earnings (loss) per share | 97,372,470 | 67,162,820 | | Diluted earnings (loss) per share | $0.18 | $0.01 | - The increase in basic and diluted EPS for the three months ended June 30, 2025, is primarily due to a **significant increase in net income** attributable to common stockholders[177](index=177&type=chunk) [22. Subsequent Events](index=50&type=section&id=22.%20SUBSEQUENT%20EVENTS) The Company plans a Q3 acquisition and completed a warrant exchange offer after the reporting period - The Company expects to complete the acquisition of an insurance brokerage firm in Q3 2025, using an outstanding note receivable of approximately **$9.0 million** as consideration[180](index=180&type=chunk) - An exchange offer for Public and Private Placement Warrants was commenced on June 30, 2025, offering **0.23 common shares per warrant**. The offer expired on July 29, 2025, with **88% of warrants tendered**[181](index=181&type=chunk) - Following the exchange offer, the Company exercised its right to exchange remaining outstanding warrants for **0.207 common shares per warrant**, leading to the delisting of public warrants from Nasdaq by August 14, 2025[181](index=181&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting revenue growth driven by acquisitions and strong segment performance [Business Overview](index=52&type=section&id=Business%20Overview) The Company is a financial services firm focused on alternative asset management and longevity-based assets - Abacus Global Management, Inc. is a financial services company specializing in alternative asset management, data-driven wealth solutions, technology innovations, and institutional services, with a focus on longevity-based assets[185](index=185&type=chunk) [Results of Operations](index=52&type=section&id=Results%20of%20Operations) Operations show substantial revenue and income growth, primarily driven by acquisitions and the Life Solutions segment Total Revenues by Segment (Three Months Ended June 30) | Segment | 2025 | 2024 | Change | % Change | | :---------------- | :----------- | :----------- | :----------- | :--------- | | Asset management | $8,761,876 | $204,888 | $8,556,988 | 4176.4% | | Life solutions | $47,300,844 | $28,871,214 | $18,429,630 | 63.8% | | Technology services | $161,900 | $0 | $161,900 | NM | | TOTAL REVENUES | $56,224,620 | $29,076,102 | $27,148,518 | 93.4% | Total Revenues by Segment (Six Months Ended June 30) | Segment | 2025 | 2024 | Change | % Change | | :---------------- | :------------ | :----------- | :------------ | :--------- | | Asset management | $16,534,953 | $422,823 | $16,112,130 | 3810.6% | | Life solutions | $83,599,501 | $50,140,463 | $33,459,038 | 66.7% | | Technology services | $229,512 | $0 | $229,512 | NM | | TOTAL REVENUES | $100,363,966 | $50,563,286 | $49,800,680 | 98.5% | - Asset management revenue surged due to the **Carlisle and FCF acquisitions** in December 2024[189](index=189&type=chunk)[190](index=190&type=chunk) - Life solutions revenue increased significantly, driven by **higher realized gains** from life insurance policies[191](index=191&type=chunk)[192](index=192&type=chunk) Gross Profit and Operating Income (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :---------------- | :----------- | :----------- | :----------- | :--------- | | GROSS PROFIT | $87,200,915 | $45,098,855 | $42,102,060 | 93.4% | | OPERATING INCOME | $43,546,559 | $9,023,899 | $34,522,660 | 382.6% | | NET INCOME (LOSS) | $23,009,955 | $(623,722) | $23,633,677 | NM | - Interest expense increased by **$10.2 million (124.0%)** for the six months ended June 30, 2025, primarily due to increased Fixed Rate Senior Unsecured Notes and the Senior Secured Credit Facility[221](index=221&type=chunk) [Results of Operations—Segment Results](index=62&type=section&id=Results%20of%20Operations—Segment%20Results) Segment results highlight exceptional growth in Asset Management and sustained strength in Life Solutions Asset Management Segment Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :---------- | :------------ | :----------- | :------------ | :---------- | | Revenue | $16,534,953 | $422,823 | $16,112,130 | 3810.6% | | Cost of revenue | $5,789,111 | $531,063 | $5,258,048 | 990.1% | | Gross profit | $10,745,842 | $(108,240) | $10,854,082 | (10027.8)% | - Asset Management segment revenue and gross profit significantly increased due to the **Carlisle and FCF acquisitions**[230](index=230&type=chunk) Life Solutions Segment Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :---------- | :------------ | :----------- | :------------ | :--------- | | Revenue | $83,599,501 | $50,140,463 | $33,459,038 | 66.7% | | Cost of revenue | $6,411,404 | $4,933,368 | $1,478,036 | 30.0% | | Gross profit | $77,188,097 | $45,207,095 | $31,981,002 | 70.7% | - Life Solutions segment revenue and gross profit increased due to **higher policy acquisition and trading activity**[234](index=234&type=chunk) Technology Services Segment Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :---------- | :---------- | :---------- | :---------- | :--------- | | Revenue | $229,512 | $0 | $229,512 | NM | | Cost of revenue | $962,536 | $0 | $962,536 | NM | | Gross loss | $(733,024) | $0 | $(733,024) | NM | - Technology Services segment commenced revenue activity in December 2024, resulting in a gross loss for the six months ended June 30, 2025, primarily due to compensation expenses[239](index=239&type=chunk) [Non-GAAP Financial Measures and Key Business Metrics](index=64&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Key%20Business%20Metrics) Non-GAAP measures show significant growth in adjusted net income and a stable adjusted EBITDA margin - The Company uses non-GAAP measures like Adjusted Net Income, Adjusted EPS, and Adjusted EBITDA to evaluate business performance, excluding non-recurring or non-cash items[240](index=240&type=chunk)[241](index=241&type=chunk)[245](index=245&type=chunk) Adjusted Net Income and Adjusted EPS (Six Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------- | :------------ | :------------ | | NET INCOME (LOSS) ATTRIBUTABLE TO ABACUS GLOBAL MANAGEMENT, INC. | $22,223,272 | $(578,762) | | ADJUSTED NET INCOME | $39,084,239 | $18,413,219 | | ADJUSTED EPS - BASIC | $0.41 | $0.29 | | ADJUSTED EPS - DILUTED | $0.40 | $0.29 | Adjusted EBITDA and Adjusted EBITDA Margin (Six Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------- | :------------ | :------------ | | NET INCOME (LOSS) | $23,009,955 | $(623,722) | | Adjusted EBITDA | $56,044,091 | $28,293,097 | | Adjusted EBITDA margin | 55.8% | 56.0% | | Net income (loss) margin | 22.9% | (1.2)% | [Pro Forma Non-GAAP Financial Measures and Segment Results](index=67&type=section&id=Pro%20Forma%20Non-GAAP%20Financial%20Measures%20and%20Segment%20Results) Pro forma results, including the Carlisle acquisition, demonstrate strong underlying growth in adjusted earnings - Pro Forma Adjusted Net Income and EPS include Carlisle's historical information prior to its acquisition to provide a combined view of operations[250](index=250&type=chunk) Pro Forma Adjusted Net Income and EPS (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------ | :------------ | :------------ | | PRO FORMA NET INCOME AVAILABLE TO ABACUS GLOBAL MANAGEMENT, INC. | $22,223,272 | $3,760,143 | | PRO FORMA ADJUSTED NET INCOME | $39,084,239 | $22,752,124 | | PRO FORMA ADJUSTED EPS—BASIC | $0.41 | $0.28 | | PRO FORMA ADJUSTED EPS—DILUTED | $0.40 | $0.27 | Pro Forma Adjusted EBITDA and Margin (Six Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------- | :------------ | :------------ | | PRO FORMA NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $23,009,955 | $3,715,183 | | PRO FORMA ADJUSTED EBITDA | $56,044,091 | $35,948,108 | | PRO FORMA ADJUSTED EBITDA MARGIN | 55.8% | 55.9% | | PRO FORMA NET INCOME MARGIN | 22.9% | 5.8% | [Key Business Metrics](index=71&type=section&id=Key%20Business%20Metrics) Key metrics reflect a significant increase in policy sales, realized gains, and assets under management - Key metrics include revenue from life policies (sales, maturities, realized gains), asset management revenue (AUM/NAV), servicing revenue (policies serviced, face value, invested dollars), and origination revenue (policy originations)[259](index=259&type=chunk)[261](index=261&type=chunk) Life Policies (Fair Value Method) Activity (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------ | :--- | :--- | :----- | :--------- | | Policies bought | 421 | 362 | 59 | 16.3% | | Policies sold | 517 | 192 | 325 | 169.3% | | Policies matured | 20 | 5 | 15 | 300.0% | | Average realized gain on policies sold | 34.1% | 19.4% | | | | Total realized gains, net of premiums paid | $72,207,798 | $18,002,387 | $54,205,411 | 301.1% | | Realized gains from maturities, net of premiums paid | $10,480,671 | $1,365,104 | $9,115,567 | 667.8% | Origination and Servicing Metrics (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------ | :------------- | :------------- | :----- | :--------- | | Assets under management | $2,865,633,717 | $0 | $2,865,633,717 | NM | | Number of policies serviced | 3,101 | 1,155 | 1,946 | 168.5% | | Face value of policies serviced | $7,383,844,908 | $2,526,819,484 | $4,857,025,424 | 192.2% | | Total invested dollars | $2,931,575,304 | $1,081,579,116 | $1,849,996,188 | 171.0% | | Number of policy originations to external parties | 61 | 61 | 0 | 0% | | Number of policy originations to subsidiaries eliminated in consolidation | 312 | 194 | 118 | 60.8% | [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased due to financing outflows, but operating cash flow improved significantly - Cash and cash equivalents decreased to **$74,836,871** as of June 30, 2025, from $131,944,282 at December 31, 2024[267](index=267&type=chunk) - Operating activities provided **$14,511,602 in cash** for the six months ended June 30, 2025, a significant improvement from **$(64,542,510) used** in the prior year[272](index=272&type=chunk) - Financing activities used **$(57,875,671) in cash** for the six months ended June 30, 2025, a substantial decrease from **$130,993,784 provided** in the prior year, mainly due to reduced stock issuance proceeds, increased share repurchases, and debt repayments[274](index=274&type=chunk)[276](index=276&type=chunk) - Management believes current cash and cash equivalents, along with cash generated from operations, will be sufficient to support operating and debt service needs for the next 12 months[270](index=270&type=chunk) [Contractual Obligations and Commitments](index=79&type=section&id=Contractual%20Obligations%20and%20Commitments) Details on contractual obligations are cross-referenced to the notes on commitments, debt, and leases - Contractual obligations and commitments are detailed in Note 12 (Commitments and Contingencies), Note 14 (Long-Term Debt), and Note 20 (Leases) of the Interim Financial Statements[279](index=279&type=chunk) [Critical Accounting Policies and Estimates](index=79&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes to critical accounting policies have occurred since the last annual report - There have been no material changes to the Company's critical accounting policies or methodologies since the most recent Annual Report on Form 10-K, other than new policies described in Note 2[277](index=277&type=chunk) [Recent Accounting Pronouncements](index=79&type=section&id=Recent%20Accounting%20Pronouncements) Information on new accounting standards is available in the notes to the financial statements - Information on recently issued accounting pronouncements and their future adoption is discussed in Note 2 (Summary of Significant Accounting Policies and Recent Accounting Standards) of the condensed notes to consolidated financial statements[278](index=278&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=80&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, detailed market risk disclosures are not required - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[280](index=280&type=chunk) [Item 4. Controls and Procedures](index=80&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the period end - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[281](index=281&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[282](index=282&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently a party to any material litigation - The Company is not a party to any litigation that is material to ongoing operations as of June 30, 2025[283](index=283&type=chunk) [Item 1A. Risk Factors](index=81&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to previously disclosed risk factors - No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have occurred as of the date of this report[284](index=284&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details regarding the company's stock repurchase program are provided in the financial statement notes - Details of the stock repurchase program and repurchases made during the six months ended June 30, 2025, are discussed in Note 15 Convertible Preferred Stock and Stockholders' Equity[285](index=285&type=chunk) [Item 3. Defaults Upon Senior Securities](index=81&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[286](index=286&type=chunk) [Item 4. Mine Safety Disclosures](index=81&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The Company has no mine safety disclosures to report - There are no mine safety disclosures[286](index=286&type=chunk) [Item 5. Other Information](index=81&type=section&id=Item%205.%20Other%20Information) No officers or directors adopted or terminated any specified trading arrangements during the quarter - No officers or directors adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[286](index=286&type=chunk) [Item 6. Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of this quarterly report - Exhibits include various agreements such as the Agreement and Plan of Merger, Share Purchase Agreement, Credit Agreement, and Security Agreement[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Corporate governance documents like the Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws are also filed[289](index=289&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer, as required by the Sarbanes-Oxley Act, are included[290](index=290&type=chunk)[291](index=291&type=chunk)

Table of Contents OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 001-39403 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 Delaware 85-1210472 (State or other jurisdiction of incorporation or organization) (I.R.S. Em ...

ACCESS Newswire Reports Second Quarter 2025 Results Operational Efficiencies Improve, Increasing EBITDA and Cash Flow RALEIGH, NC / ACCESS Newswire / ACCESS Newswire Inc. (NYSE American:ACCS) (the "Company"), a leading communications company, today reported its operating results for the three and six months ended June 30, 2025. "We're pleased to report another quarter of sequential growth, highlighting the continued momentum of our business as we execute on our long-term strategy," said Brian R. Balbirnie, ...

Management's Discussion and Analysis of Financial Condition and Results of Operations [About Cardinal Health](index=6&type=section&id=About%20Cardinal%20Health) Cardinal Health is a global healthcare company operating through its Pharmaceutical (Pharma) and Medical Products (GMPD) segments, with a third "Other" category for smaller units - The company reports its financial results in two main segments: **Pharmaceutical and Specialty Solutions ("Pharma")** and **Global Medical Products and Distribution ("GMPD")**[19](index=19&type=chunk) - The Pharma segment distributes branded, generic, and specialty pharmaceuticals in the United States and provides related services to manufacturers and healthcare providers[19](index=19&type=chunk) - The GMPD segment manufactures, sources, and distributes Cardinal Health brand and national brand medical, surgical, and laboratory products across the U.S., Canada, Europe, and Asia[20](index=20&type=chunk) - The "Other" category comprises operating segments not large enough for separate disclosure, including Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight Logistics[19](index=19&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) [Consolidated Results](index=7&type=section&id=Consolidated%20Results) Fiscal 2025 revenue decreased 2% to $222.6 billion, while GAAP operating earnings surged 83% and non-GAAP operating earnings grew 15% - Revenue for fiscal 2025 decreased by **2% to $222.6 billion**, mainly due to the expiration of the OptumRx contracts, though this was partially offset by growth in branded and specialty pharmaceutical sales[23](index=23&type=chunk) Fiscal 2025 vs. 2024 Operating Earnings (GAAP and Non-GAAP) | (in millions) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | **GAAP operating earnings** | **$2,275** | **$1,243** | **83%** | | **Non-GAAP operating earnings** | **$2,786** | **$2,414** | **15%** | - The increase in GAAP operating earnings was significantly driven by a favorable comparison to the prior year, which included **$675 million in goodwill impairment charges**, and by recognizing **$171 million in net litigation recoveries** in fiscal 2025[25](index=25&type=chunk) Fiscal 2025 vs. 2024 Diluted EPS (GAAP and Non-GAAP) | ($ per share) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | **GAAP diluted EPS** | **$6.45** | **$3.45** | **87%** | | **Non-GAAP diluted EPS** | **$8.24** | **$7.53** | **9%** | - Cash and equivalents decreased from **$5.1 billion** at June 30, 2024, to **$3.9 billion** at June 30, 2025, with net cash from operations of **$2.4 billion** impacted by the OptumRx contract unwind and **$798 million** in opioid litigation payments[30](index=30&type=chunk) [Significant Developments in Fiscal 2025 and Trends](index=10&type=section&id=Significant%20Developments%20in%20Fiscal%202025%20and%20Trends) Fiscal 2025 was marked by strategic acquisitions totaling $5.3 billion, strong GLP-1 demand, and the adverse impact of the OptumRx contract expiration Key Acquisitions in Fiscal 2025 | Company | Closing Date | Purchase Price (in billions) | Business Description | | :--- | :--- | :--- | :--- | | **Advanced Diabetes Supply (ADS)** | Apr 1, 2025 | $1.1 | Diabetic medical supplies provider | | **GI Alliance (GIA)** | Jan 30, 2025 | $2.8 | Gastroenterology management services organization (MSO) | | **Urology America** | May 30, 2025 | $0.36 | Urology MSO (acquired through GIA) | | **Integrated Oncology Network (ION)** | Dec 2, 2024 | $1.1 | Independent community oncology network (MSO) | - The expiration of the OptumRx contracts, which accounted for **17% of consolidated revenue in fiscal 2024**, adversely impacted results of operations, financial condition, and cash flows in fiscal 2025[42](index=42&type=chunk) - Sales of **GLP-1 pharmaceuticals increased significantly**, positively impacting revenue but not meaningfully contributing to segment profit[43](index=43&type=chunk) - The company faces risks from potential U.S. tariffs on goods from countries where it operates, which could lead to substantial additional costs, price increases, and supply disruptions[40](index=40&type=chunk)[41](index=41&type=chunk) [Results of Operations](index=14&type=section&id=Results%20of%20Operations) Total revenue decreased 2% to $222.6 billion, while gross margin grew 10% and total segment profit increased 15% to $2.9 billion [Revenue](index=14&type=section&id=Revenue) Total revenue decreased 2% to $222.6 billion, driven by a 3% decline in the Pharma segment due to the OptumRx contract loss Revenue by Segment (in millions) | Segment | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Pharmaceutical and Specialty Solutions | $204,644 | $210,019 | (3)% | | Global Medical Products and Distribution | $12,636 | $12,381 | 2% | | Other | $5,382 | $4,512 | 19% | | **Total Segment Revenue** | **$222,662** | **$226,912** | **(2)%** | [Gross Margin](index=15&type=section&id=Gross%20Margin) Gross margin increased 10% to $8.2 billion, driven by acquisitions and a favorable product mix Gross Margin (in millions) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Margin | $8,168 | $7,414 | 10% | - The increase in gross margin was primarily due to acquisitions (MSO platforms, ADS), increased contribution from branded and specialty pharmaceuticals, and BioPharma Solutions, partially offset by the OptumRx contract expiration[57](index=57&type=chunk) [Distribution, Selling, General, and Administrative ("SG&A") Expenses](index=15&type=section&id=Distribution%2C%20Selling%2C%20General%2C%20and%20Administrative%20%28%22SG%26A%22%29%20Expenses) SG&A expenses increased 8% to $5.4 billion, primarily due to the integration of recent acquisitions and higher operational costs SG&A Expenses (in millions) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | SG&A Expenses | $5,382 | $5,000 | 8% | [Segment Profit](index=16&type=section&id=Segment%20Profit) Total segment profit grew 15% to $2.9 billion, with strong performance across all segments Segment Profit (in millions) | Segment | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Pharmaceutical and Specialty Solutions | $2,258 | $2,015 | 12% | | Global Medical Products and Distribution | $135 | $92 | 47% | | Other | $516 | $423 | 22% | | **Total Segment Profit** | **$2,909** | **$2,530** | **15%** | [Provision for Income Taxes](index=18&type=section&id=Provision%20for%20Income%20Taxes) The effective income tax rate decreased to 25.3% from 28.9%, mainly due to the absence of a prior-year goodwill impairment charge Effective Income Tax Rate Reconciliation | | 2025 | 2024 | | :--- | :--- | :--- | | Provision at Federal statutory rate | 21.0% | 21.0% | | Goodwill Impairment | — | 8.7% | | Specialty Alliance Share-based Compensation | 1.4% | — | | Other items, net | 2.9% | (1.8)% | | **Effective income tax rate** | **25.3%** | **28.9%** | [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased to $3.9 billion as the company deployed $5.3 billion for acquisitions and returned capital to shareholders, funded partly by new debt - Cash and equivalents decreased to **$3.9 billion** at June 30, 2025, from **$5.1 billion** at June 30, 2024[80](index=80&type=chunk) - Net cash provided by operating activities was **$2.4 billion** in fiscal 2025, which includes the impact of unwinding the OptumRx contracts and **$798 million** in opioid litigation payments[81](index=81&type=chunk) - Major uses of cash in fiscal 2025 included **$5.3 billion for acquisitions**, **$765 million for share repurchases**, **$547 million for capital expenditures**, and **$494 million for dividends**[82](index=82&type=chunk) - The company issued new long-term debt with net proceeds of **$2.9 billion** and borrowed **$800 million** from a term loan to fund acquisitions and for general purposes[82](index=82&type=chunk)[89](index=89&type=chunk) Contractual Obligations and Cash Requirements as of June 30, 2025 (in millions) | Obligation | Total | | :--- | :--- | | Long-term debt and short-term borrowings | $8,314 | | Interest on long term debt | $4,032 | | Lease obligations (Finance & Operating) | $1,157 | | Purchase obligations and other payments | $1,510 | | Opioid litigation settlement agreements | $4,829 | | **Total** | **$19,842** | [Critical Accounting Policies and Sensitive Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Policies%20and%20Sensitive%20Accounting%20Estimates) This section details key accounting policies requiring significant management judgment, including goodwill impairment, litigation contingencies, and inventory valuation Allowance for Doubtful Accounts Activity (in millions) | | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Beginning Balance | $233 | $240 | $207 | | Charged to costs and expenses | $89 | $108 | $165 | | Reductions/Write-offs | ($109) | ($115) | ($132) | | **Ending Balance** | **$213** | **$233** | **$240** | - **52% of inventories** at June 30, 2025, are valued using the last-in, first-out (LIFO) method, primarily for merchandise at core pharmaceutical distribution facilities[113](index=113&type=chunk) - In fiscal 2024, the company recognized a **$675 million goodwill impairment charge** related to the GMPD segment; no impairments were recorded for other reporting units in fiscal 2025[123](index=123&type=chunk)[124](index=124&type=chunk) - The company has accrued **$56 million** for losses and legal defense costs related to IVC filter product liability lawsuits as of June 30, 2025[132](index=132&type=chunk) - A new tax law, the One Big Beautiful Bill Act (OBBBA), was signed in July 2025, and the company is currently evaluating its impact on the consolidated financial statements[145](index=145&type=chunk) Explanation and Reconciliation of Non-GAAP Financial Measures [GAAP to Non-GAAP Reconciliations](index=35&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) This section reconciles GAAP to non-GAAP financial measures, adjusting for items like restructuring, amortization, and litigation to reflect underlying business performance - Management uses non-GAAP financial measures internally to evaluate performance, for financial planning, and to determine incentive compensation, believing they better reflect the performance of the underlying, ongoing business[148](index=148&type=chunk) - Key exclusions from non-GAAP measures include LIFO charges/credits, restructuring and severance costs, amortization and other acquisition-related costs, impairments, and litigation charges/recoveries[149](index=149&type=chunk)[158](index=158&type=chunk) Fiscal Year 2025 GAAP to Non-GAAP Reconciliation Summary (in millions, except EPS) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | **Operating Earnings** | $2,275 | $511 | $2,786 | | **Net Earnings** | $1,561 | $434 | $1,995 | | **Diluted EPS** | $6.45 | $1.79 | $8.24 | Quantitative and Qualitative Disclosures about Market Risk [Market Risk Disclosures](index=36&type=section&id=Market%20Risk%20Disclosures) The company is exposed to market risks from foreign exchange, interest rates, and commodity prices, which it manages through a hedging program - The company's primary market risks are related to foreign exchange, interest rates, and commodity prices, which are managed through a hedging program[162](index=162&type=chunk) - Using a Value-At-Risk (VAR) model, the potential maximum loss in earnings from transactional foreign exchange exposure is estimated at **$13 million** for the upcoming fiscal year[165](index=165&type=chunk) - A hypothetical **50 basis point** increase/decrease in interest rates would result in a **$12 million** increase/decrease in interest expense and a **$14 million** increase/decrease in interest income, respectively[168](index=168&type=chunk)[169](index=169&type=chunk) - The company has a forecasted direct commodity exposure of **$491 million** for the upcoming fiscal year; a hypothetical **10%** fluctuation in commodity prices could result in a potential gain/loss of **$49 million**[172](index=172&type=chunk) Business [Business Overview](index=38&type=section&id=Business%20Overview) Cardinal Health is a global healthcare company distributing pharmaceuticals and medical products, recently expanding its specialty and at-home offerings through acquisitions - The Pharmaceutical and Specialty Solutions segment distributes a wide range of pharmaceutical products to retailers and hospitals, provides specialty pharma services, and operates MSO platforms[181](index=181&type=chunk) - The GMPD segment manufactures and sources Cardinal Health branded medical products and distributes a broad range of national brand medical, surgical, and laboratory products[182](index=182&type=chunk)[184](index=184&type=chunk) - The company operates Red Oak Sourcing, a generic pharmaceutical sourcing venture with CVS Health, with a term extending through June 2029[182](index=182&type=chunk)[183](index=183&type=chunk) Recent Major Acquisitions | Date | Company | Business | Acquisition Price (in billions) | | :--- | :--- | :--- | :--- | | 05/30/25 | Urology America | Urology MSO | $0.4 | | 04/01/25 | ADS | Diabetic medical supplies | $1.1 | | 01/30/25 | GI Alliance (GIA) | Gastroenterology MSO | $2.8 | | 12/02/24 | ION | Oncology MSO | $1.1 | | 03/18/24 | Specialty Networks | Multi-specialty GPO | $1.2 | [Customers, Suppliers, and Competition](index=43&type=section&id=Customers%2C%20Suppliers%2C%20and%20Competition) The company has significant customer and supplier concentration and operates in a highly competitive market against national and regional distributors - Customer concentration is high: **CVS Health accounted for 30% of fiscal 2025 revenue**, and the top five customers accounted for 43%[194](index=194&type=chunk) - The five largest suppliers accounted for **37% of revenue** in fiscal 2025, with the single largest supplier representing 9%[195](index=195&type=chunk) - Key competitors in the Pharma segment include **McKesson Corporation** and **Cencora, Inc**; in the GMPD segment, competitors include **Medline Industries, Inc** and **Owens & Minor, Inc**[197](index=197&type=chunk)[198](index=198&type=chunk) [Human Capital Management](index=43&type=section&id=Human%20Capital%20Management) As of June 30, 2025, the company employed approximately 57,700 people globally, with a strategy focused on culture, talent, and safety - The company had approximately **57,700 employees** globally as of June 30, 2025[201](index=201&type=chunk) - **35,000 employees** work in distribution centers, manufacturing facilities, or pharmacies, while **21,000** work in other functions like finance, IT, and sales[202](index=202&type=chunk) - The Human Resources and Compensation Committee of the Board oversees human capital management strategies, including talent attraction, development, retention, and succession planning[204](index=204&type=chunk) [Regulatory Matters](index=46&type=section&id=Regulatory%20Matters) The business is highly regulated by numerous U.S. and foreign agencies, covering areas from controlled substances and medical devices to data privacy - The business is subject to extensive regulation by agencies such as the **FDA, DEA, NRC, and FTC** in the U.S., as well as comparable agencies abroad[215](index=215&type=chunk)[224](index=224&type=chunk) - Distribution of controlled substances is governed by the Controlled Substances Act (CSA), and the **National Opioid Settlement Agreement (NOSA)** imposes specific injunctive relief terms on anti-diversion programs until 2027[216](index=216&type=chunk)[217](index=217&type=chunk) - Manufacturing and marketing of medical devices require clearance or approval, such as the **510(k) or PMA process** in the U.S. and **CE Mark Certification** under the new Medical Device Regulation (MDR) in the EU[219](index=219&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - The company is subject to evolving privacy laws, including **HIPAA** in the U.S. and **GDPR** in the EU, due to its handling of patient-identifiable health information[223](index=223&type=chunk)[226](index=226&type=chunk) - The **Drug Supply Chain Security Act (DSCSA)** requires a national system for tracing prescription drugs, with compliance deadlines extended into 2025[228](index=228&type=chunk) Risk Factors [Legal, Regulatory, & Compliance Risks](index=54&type=section&id=Legal%2C%20Regulatory%2C%20%26%20Compliance%20Risks) The company faces significant risks from complex regulations, potential litigation, changes in tax laws, and ongoing opioid-related compliance obligations - The business is subject to rigorous regulatory and licensing requirements; failure to comply could result in suspension of operations, recalls, or sanctions[242](index=242&type=chunk) - The Department of Justice is investigating potential violations of the **Anti-Kickback Statute** and **False Claims Act** related to a 2022 GPO acquisition[244](index=244&type=chunk) - The company faces risks from potential adverse changes in tax laws and challenges by the IRS to its tax positions, including the deductibility of opioid litigation accruals and a self-insurance loss carryback under the CARES Act[254](index=254&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk) - Opioid-related legal proceedings, including compliance with the **National Opioid Settlement Agreement (NOSA)** and lawsuits from private plaintiffs, could have additional negative effects on operations and financial results[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) [Industry & Economic Risks](index=62&type=section&id=Industry%20%26%20Economic%20Risks) The company is exposed to risks from international trade policies, generic drug market volatility, supply chain disruptions, and intense competitive pressure - Changes in U.S. or international trade policies, including **tariffs**, could disrupt global operations and negatively impact financial results by increasing costs and causing supply shortages[275](index=275&type=chunk)[277](index=277&type=chunk) - The Pharma segment's profit margin is subject to volatility from **generic pharmaceutical pricing**, launches, and customer purchasing volumes, which may not be offset by sourcing ventures like Red Oak[279](index=279&type=chunk) - The company is subject to fluctuations in the cost and availability of raw materials (e.g., oil-based resins, cotton) and has experienced higher supply chain costs that negatively impacted **GMPD segment profit**[284](index=284&type=chunk) - **Consolidation in the U.S. healthcare industry** among distributors, manufacturers, and providers could create larger enterprises with greater negotiating power, potentially harming the company's results[292](index=292&type=chunk) [Business & Operational Risks](index=68&type=section&id=Business%20%26%20Operational%20Risks) Key operational risks include dependency on information systems, cybersecurity threats, significant customer concentration, and challenges in integrating large acquisitions - Operations depend on the proper functioning of information systems and distribution networks, which are vulnerable to physical disruptions and **cybersecurity incidents**[295](index=295&type=chunk) - A material **cyber-attack** poses a significant risk, as unauthorized parties continuously attempt to gain access to systems, and the sophistication of these threats is increasing[297](index=297&type=chunk)[298](index=298&type=chunk) - The company has significant customer concentration, with **CVS Health accounting for 30% of fiscal 2025 revenue** and 26% of gross trade receivables at year-end[305](index=305&type=chunk) - Integrating recent large acquisitions (ION, GIA, ADS) and entering new business lines like physician practice management present numerous risks, including regulatory challenges, unforeseen liabilities, and difficulties in retaining key personnel and customers[306](index=306&type=chunk)[308](index=308&type=chunk)[310](index=310&type=chunk) - The company recorded goodwill impairment charges of **$675 million** and **$1.2 billion** in fiscal 2024 and 2023, respectively, related to the GMPD segment; future impairments of goodwill or other long-lived assets remain a risk[321](index=321&type=chunk) Cybersecurity [Cybersecurity Risk Management, Strategy, and Governance](index=75&type=section&id=Cybersecurity%20Risk%20Management%2C%20Strategy%2C%20and%20Governance) The company integrates cybersecurity into its enterprise risk management, using the NIST framework and providing Board-level oversight through the Audit Committee - The company's cybersecurity risk management strategy is benchmarked to industry standards like the **NIST framework** and includes measures such as penetration testing and tabletop exercises[322](index=322&type=chunk) - The **Chief Information Security Officer (CISO)**, reporting to the CIO, leads the assessment and management of cybersecurity risks[324](index=324&type=chunk) - The Board's **Audit Committee** has primary responsibility for overseeing cybersecurity risks, receiving at least quarterly updates from the CISO and CIO[326](index=326&type=chunk) - To date, the company is not aware of any cybersecurity incidents that have **materially affected** or are reasonably likely to materially affect its business[324](index=324&type=chunk) Financial Statements and Supplementary Data [Consolidated Financial Statements](index=84&type=section&id=Consolidated%20Financial%20Statements) For fiscal 2025, the company reported revenue of $222.6 billion, net earnings of $1.56 billion, and total assets of $53.1 billion Consolidated Statement of Earnings Highlights (in millions) | Metric | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Revenue | $222,578 | $226,827 | $204,979 | | Gross Margin | $8,168 | $7,414 | $6,874 | | Operating Earnings | $2,275 | $1,243 | $752 | | Net Earnings Attributable to Cardinal Health, Inc. | $1,561 | $852 | $330 | Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $3,874 | $5,133 | | Total Current Assets | $36,373 | $34,884 | | Total Assets | $53,122 | $45,121 | | Total Current Liabilities | $38,897 | $35,640 | | Total Liabilities | $55,756 | $48,333 | | Total Shareholders' Deficit | ($2,634) | ($3,212) | Consolidated Statement of Cash Flows Highlights (in millions) | Metric | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $2,397 | $3,762 | $2,844 | | Net cash used in investing activities | ($5,593) | ($1,849) | ($454) | | Net cash provided by/(used in) financing activities | $1,940 | ($847) | ($3,051) | [Notes to Consolidated Financial Statements](index=89&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and provide further information on acquisitions, goodwill, debt, litigation, and subsequent events - **Note 2 (Acquisitions):** Details the acquisitions of ADS ($1.1B), GIA (73% for $2.8B), and ION ($1.1B) in fiscal 2025, which significantly increased goodwill and intangible assets[476](index=476&type=chunk)[478](index=478&type=chunk)[481](index=481&type=chunk) - **Note 5 (Goodwill):** Goodwill increased from **$4.7 billion to $9.7 billion**, primarily due to the GIA and ION acquisitions in the Pharma segment and the ADS acquisition in the Other segment[503](index=503&type=chunk)[504](index=504&type=chunk) - **Note 7 (Debt):** Total long-term obligations and other short-term borrowings increased to **$8.5 billion from $5.1 billion**, mainly from issuing **$2.9 billion** in new notes and borrowing **$800 million** under a term loan to fund acquisitions[513](index=513&type=chunk)[516](index=516&type=chunk)[522](index=522&type=chunk) - **Note 8 (Litigation):** As of June 30, 2025, the company has accrued **$4.9 billion** for opioid-related matters; during fiscal 2025, it made payments totaling **$798 million** related to these settlements[540](index=540&type=chunk) - **Note 16 (Subsequent Events):** On August 12, 2025, the company announced a definitive agreement to acquire Solaris Health, a urology MSO, for approximately **$1.9 billion** in cash[640](index=640&type=chunk)

For the Quarterly Period Ended June 30, 2025 OR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Registrant's telephone number, including area code) 6308 Benjamin Rd, Suite 708 Tampa, Florida (Former name, former address and former fiscal year, if changed since last report) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission ...

PART I: FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Scienture Holdings divested legacy businesses, now focused on specialty pharma, but faces critical liquidity and a $9.8M net loss, raising going concern doubts Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $15,391 | $308,096 | | Total current assets | $856,625 | $6,305,477 | | Goodwill | $21,372,960 | $21,372,960 | | Intangible assets, net | $76,400,000 | $76,400,000 | | Total assets | $104,294,834 | $104,853,805 | | **Liabilities & Equity** | | | | Total current liabilities | $7,688,199 | $7,906,893 | | Total liabilities | $26,434,370 | $25,781,684 | | Accumulated deficit | $(48,823,543) | $(39,038,973) | | Total stockholders' equity | $77,860,464 | $79,072,121 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | 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 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $0 | $18,699 | $10,258 | $18,699 | | Total operating expenses | $5,157,906 | $1,494,988 | $8,729,896 | $6,987,959 | | Net loss from continuing operations | $(6,720,573) | $(1,624,741) | $(9,784,570) | $(8,258,163) | | Net (loss) income | $(6,720,573) | $(1,833,902) | $(9,784,570) | $19,412,131 | | Basic Net loss per share (continuing ops) | $(0.48) | $(1.16) | $(0.83) | $(6.75) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,990,704) | $(5,967,718) | | Net cash provided by investing activities | $0 | $27,431,815 | | Net cash provided by (used in) financing activities | $4,697,999 | $(13,896,011) | | **Net change in cash** | **$(292,705)** | **$7,568,086** | | Cash at end of period | $15,391 | $7,719,993 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail corporate changes, legacy divestiture, Scienture acquisition, a 'Going Concern' warning due to low cash and deficit, and significant legal proceedings - The company completed the sale of its legacy subsidiaries (IPS, Softell, and Bonum Health, Inc.) on April 30, 2025, to Tollo Health, LLC, an entity with beneficial interests held by the company's former CEO and President. The consideration was a **$5 million promissory note**, resulting in a recognized loss on disposition of **$385,528**[30](index=30&type=chunk)[34](index=34&type=chunk) - Management has expressed substantial doubt about the company's ability to continue as a going concern due to its accumulated deficit of **$48.8 million** and cash balance of only **$15,391** as of June 30, 2025. The company will need to raise additional capital to meet its funding requirements for the next 12 months[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - The company is facing two significant legal challenges: a complaint from Eat Well Investment Group seeking over **$8.5 million** in stock and other damages related to the prior Superlatus acquisition, and a complaint from Kesin Pharma Corporation seeking payment of a disputed **$1.285 million** termination fee[149](index=149&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk) - Subsequent to the quarter's end, in July and August 2025, the company initiated a capital raise of up to **$3.0 million**, and as of August 6, 2025, had received approximately **$1.3 million** in proceeds from the sale of **754,716 shares** of common stock at **$1.59 per share**[163](index=163&type=chunk)[164](index=164&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=36&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) MD&A details the strategic pivot to specialty pharma, focusing on Scienture's pipeline, with critically low liquidity and surging expenses reinforcing going concern uncertainty [Company Overview and Strategy](index=36&type=section&id=Company%20Overview%20and%20Strategy) Following legacy divestiture and Scienture acquisition, the company transformed into a specialty pharmaceutical firm focused on CNS/cardiovascular diseases, advancing its pipeline including FDA-approved SCN-102 - The company has completed a strategic realignment by divesting its legacy subsidiaries (IPS, Softell, Bonum Health) to sharpen its focus on the high-growth Branded and Specialty Pharma markets through its Scienture subsidiary[178](index=178&type=chunk) - Scienture's lead product candidate, SCN-102 (Arbli), an oral liquid formulation of losartan, was approved by the FDA in March 2025. It is the first and only FDA-approved ready-to-use oral liquid losartan in the U.S. market[189](index=189&type=chunk) Scienture's Development Pipeline | Product Candidate | Description | Development Stage/Key Milestone | | :--- | :--- | :--- | | **SCN-102 (Arbli)** | Losartan Oral Suspension for hypertension | FDA approved in March 2025 | | **SCN-104** | Multi-dose DHE injection pen for migraine | Planning Phase 1 study in 2026 post-IND submission | | **SCN-106** | Potential Biosimilar (thrombolytic agent) | Completed Biosimilar Initial Advisory meeting with FDA | | **SCN-107** | Bupivacaine Long-Acting Injection for pain | Anticipates IND submission and Phase 1 study initiation in 2025 | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is precarious, with cash falling 95% to $15,391 and working capital deteriorating to a $6.8M deficit, necessitating capital raises and reinforcing going concern doubts Key Liquidity Metrics | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash | $15,391 | $308,096 | -95% | | Current Assets | $856,625 | $6,305,477 | -86% | | Current Liabilities | $7,688,199 | $7,906,893 | -3% | | Working Capital | $(6,831,574) | $(1,601,416) | -327% | - The company's primary sources of liquidity have shifted from operations and asset sales to prospective sales of equity and debt securities following the divestiture of its legacy businesses[206](index=206&type=chunk) - A 'Going Concern' warning is explicitly stated, citing the accumulated deficit of **$48.8 million**, a cash balance of only **$15,391**, and the need to raise additional capital to fund operations over the next 12 months[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Operational results reflect strategic transformation, with revenues near zero and surging operating expenses, including R&D and interest, leading to a significantly wider net loss from continuing operations Comparison of Operations for the Three Months Ended June 30, 2025 and 2024 | Line Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $0 | $18,699 | -100% | | Total operating expenses | $5,157,906 | $1,494,988 | +245% | | Research and development | $843,549 | $0 | N/A | | Interest expense | $653,493 | $4,949 | +13104% | | Net loss from continuing operations | $(6,720,573) | $(1,624,741) | +314% | Comparison of Operations for the Six Months Ended June 30, 2025 and 2024 | Line Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $10,258 | $18,699 | -45% | | Total operating expenses | $8,729,896 | $6,987,959 | +25% | | Research and development | $1,418,228 | $0 | N/A | | Interest expense | $1,324,277 | $103,464 | +1180% | | Net loss from continuing operations | $(9,784,570) | $(8,258,163) | +18% | - The increase in operating expenses is primarily due to the addition of personnel and R&D activities from the Scienture acquisition, which did not exist in the prior-year period. R&D expenses for Q2 2025 were **$843,549**[220](index=220&type=chunk)[224](index=224&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk - As a "smaller reporting company," Scienture Holdings, Inc. is not required to provide the information for this item[244](index=244&type=chunk) [Controls and Procedures](index=50&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[246](index=246&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[249](index=249&type=chunk) PART II: OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in significant legal proceedings, including claims from Eat Well Investment Group and Kesin Pharma Corporation, with management acknowledging inherent litigation uncertainty - The company is subject to ongoing litigation, with details provided in Note 12 of the financial statements, which includes significant claims from Eat Well and Kesin Pharma[252](index=252&type=chunk) - Management does not currently expect pending litigation to have a material adverse effect, but notes that outcomes are uncertain and could change[251](index=251&type=chunk)[253](index=253&type=chunk) [Risk Factors](index=52&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes have been made to the risk factors disclosed in the company's Form 10-K[254](index=254&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) In Q2 2025, the company issued 3,002,086 shares for services, and post-quarter, raised $1.3 million by selling 754,716 shares in an unregistered capital raise - In Q2 2025, the company issued **3,002,086 shares** of common stock for services, including to directors, officers, and consultants[257](index=257&type=chunk)[258](index=258&type=chunk) - Post-quarter, the company raised approximately **$1.3 million** by selling **754,716 shares** of common stock in a private placement as part of an approved capital raise of up to **$3 million**[255](index=255&type=chunk)[256](index=256&type=chunk) [Defaults Upon Senior Securities](index=53&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) None reported - The company reported no defaults upon senior securities[261](index=261&type=chunk) [Mine Safety Disclosures](index=53&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Not applicable - The company reported no mine safety disclosures[262](index=262&type=chunk) [Other Information](index=53&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No material Form 8-K information was omitted, nor were there changes to stockholder nomination procedures or officer/director 10b5-1 trading plans - No material information was omitted from Form 8-K filings during the quarter[263](index=263&type=chunk) [Exhibits](index=54&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, material agreements, and officer certifications

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-34951 XTANT MEDICAL HOLDINGS, INC. (Exact name of registrant as specified in its charter) | Delaware | 2 ...