Star Metro - SWK Holdings Corporation Announces Financial Results for First Quarter 2025

DALLAS, TX / ACCESS Newswire / May 15, 2025 / SWK Holdings Corporation (Nasdaq:SWKH) ("SWK" or the "Company"), a life science-focused specialty finance company catering to small- and mid-sized commercial-stage companies, today provided a business update and announced its financial and operating results for the first quarter ended March 31, 2025.

"We had a strong start to the year and for the first quarter generated $4.5 million of GAAP net income and $8.6 million of finance receivables segment adjusted non-GAAP net income. This profitability combined with our ongoing share buyback program led to a 10.5% year-over year increase in non-GAAP tangible financing book value per share to $21.73. Tangible book value per share, including the book value of our MOD3 Pharma division, totaled $22.13."

SWK CEO Jody Staggs said, "Following the royalty monetization, our non-cash assets include approximately $231.9 million of gross finance receivables with a 14.5% effective yield, $4.7 million of public equities and warrants, and our MOD3 Pharma division. Equity and warrants in private companies as well as earn-outs are carried at zero for GAAP accounting purposes."

Mr. Staggs added, "We continue to pursue financings to innovative life science companies as evidenced by a $15.0 million financing commitment to ImpediMed Limited which closed during the quarter. We believe our portfolio of high-yielding, life science receivables is an attractive asset and view the sale of the majority of our royalty portfolio at approximately book value as supportive of this view."

First Quarter 2025 Financial Results

For the first quarter 2025, SWK reported total revenue of $11.8 million, a 3.5% increase compared to $11.4 million for the first quarter 2024. The $0.4 million increase in revenue for the three months ended March 31, 2025 mainly consisted of a $0.3 million decrease in Finance Receivables segment revenue and a $0.7 million increase in Pharmaceutical Development segment revenue.

Income before income tax expense for the quarter was $5.8 million and $0.7 million for the three months ended March 31, 2025 and 2024, respectively. First quarter 2025 income before income tax expense benefited from a decrease in provision expense, a gain on the Iluvien payoff, and an increase in gains on foreign currency, offset by a loss on revaluation of finance receivable held for sale, and an increase in net loss on warrants.

GAAP net income for the quarter ended March 31, 2025, increased to $4.5 million, or $0.37 per diluted share, from $0.5 million, or $0.04 per diluted share, for the first quarter 2024.

For the first quarter 2025, non-GAAP adjusted net income was $8.1 million, or $0.66 per share. Non-GAAP adjusted net income for the Finance Receivables segment was $8.6 million, an increase from $2.3 million for the first quarter 2024.

Total investment assets (defined as finance receivables, net of allowance for credit losses, marketable investments, and warrant assets) were $227.8 million as of March 31, 2025, a 13.0% decrease compared with total investment assets of $261.9 million as of March 31, 2024. The allowance for credit losses at quarter's end totaled $8.8 million, a decrease of $4.4 million from the first quarter of 2024.

GAAP book value per share was $23.94 as of March 31, 2025, a 6.8% increase compared to $22.42 as of March 31, 2024. Non-GAAP tangible financing book value per share totaled $21.73, an 10.5% increase compared to $19.66 at March 31, 2024. Management views non-GAAP tangible financing book value per share as a relevant metric to value the Company's core finance receivable business. Non-GAAP tangible financing book value per share removes the value of the deferred tax assets and MOD3 net asset value.

Portfolio Status

During the first quarter, SWK closed a term loan commitment with ImpediMed totaling $15.0 million and entered into an agreement to sell the majority of the royalty portfolio for $34.0 million. The royalty sale closed in early April of 2025.

In January 2025, MolecuLight made a final payment to SWK totaling $12.2 million, fully satisfying its outstanding obligation. In March 2025, ANI Pharmaceuticals exercised a buyout option on the Iluvien royalty by making a $17.3 million payment to SWK.

The first quarter 2025 effective yield was 14.5%, a 30 basis points increase from 14.2% in the first quarter 2024. The effective yield is the rate at which income is expected to be recognized if payments are received pursuant to the terms of the finance receivables. The first quarter 2025 realized yield of the finance receivable portfolio was 15.5%, an 80 basis point decrease from 16.3% in first quarter 2024. The realized yield is inclusive of all fees, including all realized unamortized fees, amendment fees, and prepayment fees, and is calculated based on the simple average of finance receivables at the beginning and end of the period. The realized yield may differ from the effective yield due to actual cash collections being greater or lesser than modeled.

As of March 31, 2025, the Company had three finance receivables in nonaccrual status: (1) the Flowonix Medical, Inc. ("Flowonix") royalty, with a carrying value of $7.4 million; (2) the Best ABT, Inc. ("Best") royalty, with a carrying value of $2.3 million; and (3) the Ideal Implant, Inc. ("Ideal") royalty, with a carrying value of $3.0 million. SWK impaired the carrying value of Flowonix royalty by $1.0 million during the quarter.

As of March 31, 2025, the Company had $7.5 million of unfunded commitments.

Total portfolio investment activity was as follows (in thousands):

Adjusted Non-GAAP Net Income

The following table provides a reconciliation of SWK's reported (GAAP) consolidated net income to SWK's adjusted consolidated net income (Non-GAAP). The table eliminates provisions for income taxes, non-cash mark-to-market changes on warrant assets and equity securities, amortization of MOD3 intangible assets, and foreign currency transaction gains and losses.

In the table above, management has deducted the impact of the following non-cash items: (i) change in the fair-market value of equities and warrants, as mark-to-market changes are non-cash, (ii) income taxes, as the Company has substantial net operating losses to offset against future income, (iii) amortization expense associated with MOD3 intangible assets, (iv) loss on revaluation of finance receivable held for sale, (v) realized gain on asset payoff, and (vi) foreign currency (gains) losses.

Finance Receivables Adjusted Non-GAAP Net Income

The following table provides a reconciliation of SWK's consolidated adjusted income before provision for income tax expense, listed in the table above, to the non-GAAP adjusted net income. The table eliminates MOD3 operating loss. The adjusted income before income tax expense is derived in the table above and eliminates income tax expense, non-cash mark-to-market changes on equity securities, amortization of MOD3 intangible assets, foreign currency transaction (gains) losses and any non-cash impact on the remeasurement of contingent consideration.

Non-GAAP Tangible Finance Book Value Per Share

The following table provides a reconciliation of SWK's GAAP book value per share to its non-GAAP tangible finance book value per share. The table eliminates the deferred tax assets, intangible assets, MOD3 property and equipment and acquisition-related contingent consideration (in thousands, except per share data):

⁽¹⁾ Outstanding shares computed as of quarter end.

Non-GAAP Financial Measures

This release includes non-GAAP adjusted net income, non-GAAP finance receivable segment net income, and non-GAAP tangible financing book value per share, which are metrics that are not compliant with generally accepted accounting principles in the United States (GAAP).

Non-GAAP adjusted net income is adjusted for certain items including (i) changes in the fair-market value of public equity-related assets and SWK's warrant assets as mark-to-market changes are non-cash, (ii) income taxes as the Company has substantial net operating losses to offset against future income, (iii) changes in the fair-market value of contingent consideration associated with the MOD3 acquisition as these changes are non-cash, and (iv) depreciation and amortization expenses, primarily associated with the 2019 acquisition of MOD3.

In addition to the adjustments noted above, non-GAAP finance receivable segment net income also excludes MOD3 operating losses.

Non-GAAP tangible financing book value per share excludes the deferred tax asset, intangible assets, MOD3 PP&E, and contingent consideration associated with the MOD3 transaction.

These non-GAAP measures may not be directly comparable to similar measures used by other companies in the Company's industry, as other companies may define such measures differently. Management believes that these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends and provides useful additional information relating to our operations and financial condition. The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to better understand its business. Non-GAAP financial results are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Further, non-GAAP financial measures, even if similarly titled, may not be calculated in the same manner by all companies, and therefore should not be compared.

Conference Call Information

SWK Holdings will host a conference call on May 16, 2025, at 9:00 a.m. CST, to discuss its corporate and financial results for the first quarter 2025.

Interested participants and investors may access the call via the numbers below:

1. 888-506-0062 (U.S.)

2. 973-528-0011 (International)

The participant Access Code is 903493 or ask for the SWK Holdings call

An archive of the webcast will remain available on the SWK Holdings' website for 12 months, starting later that day. https://investors.swkhold.com/events

About SWK Holdings Corporation

SWK Holdings Corporation is a life science focused specialty finance company partnering with small- and mid-sized commercial-stage healthcare companies. SWK provides non-dilutive financing to fuel the development and commercialization of lifesaving and life-enhancing medical technologies and products. SWK's unique financing structures provide flexible financing solutions at an attractive cost of capital to create long-term value for all SWK stakeholders. SWK's solutions include structured debt, traditional royalty monetization, synthetic royalty transactions, and asset purchases typically ranging in size from $5.0 million to $25.0 million. SWK also owns MOD3 Pharma, a clinical development and manufacturing organization providing development services to pharmaceutical partners. Additional information on the life science finance market is available on the Company's website at www.swkhold.com.

Safe Harbor For Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as "believes," "expects," "anticipates," "intends," "estimates," "plan," "will," "may," "look forward," "intend," "guidance," "future" or similar expressions are forward-looking statements. Because these statements reflect SWK's current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption "Risk Factors" and elsewhere in SWK's Form 10-K, Form 10-Q and Form 8-K filings with the Securities and Exchange Commission and as otherwise enumerated herein, could affect the Company's future financial results and could cause actual results to differ materially from those expressed in such forward-looking statements. The forward-looking statements in this press release are qualified by these risk factors. These are factors that, individually or in the aggregate, could cause the Company's actual results to differ materially from expected and historical results. You should not place undue reliance on any forward-looking statements, which speak only as of the date they are made. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise

For more information, please contact:

Investor Relations and Media
Susan Xu
728-323-0959
[email protected]

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SOURCE: SWK Holdings Corp.

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M.Johnson--SMC