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Item 1. Financial Statements

2025-07-31 compared with 2025-04-25 · 249 added, 99 removed, 442 unchanged (44% of the section changed)

25 unchanged sentences

Contingent purchase price liabilities 37,325 61,164

Operating lease liabilities 61,673 60,549

Lease liabilities 62,187 60,549

Short-term debt (1)

24 unchanged sentences

See the accompanying notes to the unaudited condensed consolidated financial statements

(1) Reflects the net debt for the Term Loan and Revolver with the associated debt issuance costs in short-term and long-term liabilities.

(1) Reflects the net debt for the Term Loan and Revolving Credit Facility with the associated debt issuance costs in short-term and long-term liabilities.

Debt and Financing Arrangements for further discussion of the short-term and long-term debt.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Revenue $ 683,496 $ 420,012 $ 1,521,510 $ 914,309

5 unchanged sentences

Interest expense ( 27,867 ) ( 5,884 ) ( 53,023 ) ( 10,395 )

Other (expense) income, net ( 1,966 ) 9,424

Other income, net 25,374 2,483 23,408 11,907

Total other (expense) income, net ( 2,493 ) ( 3,401 ) ( 29,615 ) 1,512

22 unchanged sentences

Comprehensive

Income (Loss) Totals

Income (Loss) Total

March 31, 2025 141,924 87,835 $ 1,420 $ 1,812,729 $ 1,018,895 $ ( 918,327 ) $ ( 16 ) $ 1,914,701

Net income — — — — 41,942 — — 41,942

Other comprehensive loss, net of tax — — — — — — ( 2,115 ) ( 2,115 )

Share repurchases — 991 — — — ( 71,321 ) — ( 71,321 )

Indirect repurchase of shares for minimum tax withholding — 1 — — — ( 32 ) — ( 32 )

Restricted stock units and awards 21 — — — — — — —

Stock-based compensation — — — 6,600 — — — 6,600

Business acquisitions 906 — 9 2,059 — — — 2,068

June 30, 2025 142,851 88,827 $ 1,429 $ 1,821,388 $ 1,060,837 $ ( 989,680 ) $ ( 2,131 ) $ 1,891,843

Shares Treasury

Shares Common

Stock Additional

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Total

March 31, 2024 137,855 87,743 $ 1,379 $ 841,268 $ 931,968 $ ( 910,322 ) $ 2,796 $ 867,089

Net income — — — — 19,793 — — 19,793

Other comprehensive loss, net of tax — — — — — — ( 142 ) ( 142 )

Restricted stock units and awards 16 — — — — — — —

Stock-based compensation — — — 2,378 — — — 2,378

Business acquisitions 34 — — 2,316 — — — 2,316

June 30, 2024 137,905 87,743 $ 1,379 $ 845,962 $ 951,761 $ ( 910,322 ) $ 2,654 $ 891,434

See the accompanying notes to the unaudited condensed consolidated financial statements

Shares Treasury

Shares Common

Stock Additional

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Total

December 31, 2024 137,945 87,747 1,380 1,791,863 896,122 ( 910,601 ) 1,219 1,779,983

1 unchanged sentence

Other comprehensive loss, net of tax — — — — — — ( 3,350 ) ( 3,350 )

Share repurchases — 991 — — — ( 71,321 ) — ( 71,321 )

Indirect repurchase of shares for minimum tax withholding — 89 — — — ( 7,758 ) — ( 7,758 )

3 unchanged sentences

Business acquisitions 4,683 — 47 17,288 — — — 17,335

March 31, 2025 141,924 87,835 $ 1,420 $ 1,812,729 $ 1,018,895 $ ( 918,327 ) $ ( 16 ) $ 1,914,701

June 30, 2025 142,851 88,827 $ 1,429 $ 1,821,388 $ 1,060,837 $ ( 989,680 ) $ ( 2,131 ) $ 1,891,843

Shares Treasury

5 unchanged sentences

Comprehensive

Income Totals

December 31, 2023 137,387 87,573 $ 1,374 $ 832,475 $ 855,084 $ ( 899,093 ) $ 1,778 $ 791,618

6 unchanged sentences

Business acquisitions 127 — 1 8,475 — — — 8,476

March 31, 2024 137,855 87,743 $ 1,379 $ 841,268 $ 931,968 $ ( 910,322 ) $ 2,796 $ 867,089

See the accompanying notes to the unaudited condensed consolidated financial statement

June 30, 2024 137,905 87,743 $ 1,379 $ 845,962 $ 951,761 $ ( 910,322 ) $ 2,654 $ 891,434

See the accompanying notes to the unaudited condensed consolidated financial statements

AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Bad debt expense, net of recoveries 1,862 1,244

Adjustment to contingent earnout liability 502 434

Adjustment to contingent purchase price liabilities 1,487 638

Stock-based compensation expense 12,239 5,016

8 unchanged sentences

Other liabilities ( 50,952 ) 4,116

Net cash used in operating activities ( 88,266 ) ( 63,720 )

Net cash provided by operating activities 24,880 24,439

Cash flows from investing activities:

10 unchanged sentences

Payment of bank debt ( 696,800 ) ( 551,200 )

Deferred financing costs ( 983 ) —

Payment for acquisition of treasury stock ( 71,321 ) —

Indirect repurchase of shares for minimum tax withholding ( 7,758 ) ( 11,229 )

1 unchanged sentence

Payment of contingent consideration for acquisitions and client lists ( 48,764 ) ( 41,021 )

Net cash provided by financing activities 55,363 71,188

Net cash used in financing activities ( 33,249 ) ( 11,920 )

Net decrease in cash, cash equivalents and restricted cash ( 20,668 ) ( 20,728 )

22 unchanged sentences

CBIZ, Inc., together with all of its wholly-owned subsidiaries ("CBIZ", the "Company", "we", "us", or "our"), is a diversified services company which, acting through its subsidiaries, has been providing professional business services since 1996, primarily to small and medium-sized businesses, as well as individuals, governmental entities, and not-for-profit enterprises throughout the United States and parts of Canada.

manages and reports its operations along three practice groups:

CBIZ manages and reports its operations along three practice groups:

Financial Services, Benefits and Insurance Services and National Practices.

6 unchanged sentences

The Captive Insurance Company recognizes premium as revenue monthly as monthly coverage expires.

For the three months ended March 31, 2025, revenue from the Captive Insurance Company was not material.

For the three and six months ended June 30, 2025, revenue from the Captive Insurance Company was not material.

Basis of Consolidation:

1 unchanged sentence

and all of its wholly-owned subsidiaries after elimination of all intercompany balances and transactions.

We have determined that our relationship with certain CPA firms with which we maintain ASAs qualify as variable interest entities ("VIEs"), and we are the primary beneficiary of such VIE.

We have determined that our relationship with certain CPA firms with which we maintain ASAs qualify as variable interest entities ("VIEs"), and we are the primary beneficiary of such VIEs.

The accompanying unaudited condensed consolidated financial statements do not reflect the operations or accounts of the VIEs as the impact is not material to the financial condition, results of operations, or cash flows of CBIZ.

11 unchanged sentences

NEW ACCOUNTING PRONOUNCEMENTS

The FASB ASC is the sole source of authoritative GAAP other than the SEC issued rules and regulations that apply only to SEC registrants.

The FASB issues an ASU to communicate changes to the FASB ASC.

We assess and review the impact of all issued ASUs.

During the three months ended March 31, 2025, we have implemented all new ASUs that are in effect and that may impact our consolidated financial statements.

Recent Accounting Pronouncements - The FASB ASC is the sole source of authoritative GAAP other than the SEC issued rules and regulations that apply only to SEC registrants.

The FASB issues an ASU to communicate changes to the FASB codification.

We assess and review the impact of all ASUs.

ASUs not listed below were reviewed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted - In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disaggregated information about an entity's effective tax rate reconciliation as well as information on income tax paid.

The guidance in this ASU is effective for public companies with annual periods beginning after December 15, 2024.

We plan to adopt the guidance for the fiscal year ending December 31, 2025.

We are currently evaluating the effect adoption of this ASU will have on our consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements.

The guidance in this ASU is effective for public companies with annual periods beginning after December 15, 2026, and interim periods within the annual period beginning after December 15, 2027.

We plan to adopt the guidance for the fiscal year ending December 31, 2027.

We are currently evaluating the effect of adopting this ASU will have on our consolidated financial statements.

In May 2025, the FASB issued ASU No.

2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (VIE).

This standard clarifies the guidance in determining the accounting acquirer in a business combination effected primarily by exchanging equity interests when the acquiree is a VIE that meets the definition of a business.

The guidance in this ASU is effective for public companies with annual periods beginning after December 15, 2026, and interim periods within those fiscal years.

We plan to adopt the guidance for the fiscal year ending December 31, 2027.

We are currently evaluating the effect of adopting this ASU will have on our consolidated financial statements.

BUSINESS COMBINATIONS

2 unchanged sentences

The acquisition is referred to herein as the “Transaction”.

During the three months ended March 31, 2025, the Company’s condensed consolidated statement of comprehensive income included $ 328.7 million of revenue and $ 86.5 million of operating income associated with the results of operations of Marcum.

During the six months ended June 30, 2025, the Company’s condensed consolidated statement of comprehensive income included $ 579.6 million of revenue and $ 119.1 million of operating income associated with the results of operations of Marcum.

Stock Consideration Transferred

At closing, the purchase price for the purpose of the Transaction consisted of an aggregate of $ 1,063.0 million of cash consideration and $ 934.7 million of the Company’s common stock, which represents a fair value of 13.6 million shares issued as stock consideration.

Pursuant to the terms of the Transaction, with respect to the 13.6 million shares of stock consideration, approximately 4.0 million shares, in aggregate, were delivered from January 2, 2025 to April 1, 2025 to the selling shareholders.

The remaining 9.6 million shares will be delivered in 32 monthly installments starting on May 1, 2025.

Pursuant to the terms of the Transaction, with respect to the 13.6 million shares of stock consideration, approximately 4.9 million shares, in

aggregate, were delivered from January 2, 2025 to July 1, 2025 to the selling shareholders.

The remaining 8.7 million shares will be delivered in 29 monthly installments starting on August 1, 2025.

Measurement Period Adjustments

1 unchanged sentence

As the Company finalizes the estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months from the acquisition date).

During the three months ended March 31, 2025, the Company reassessed its estimates and inputs as new information about facts and circumstances that existed as of the acquisition date became known.

As a result, the Company recorded a measurement period adjustment to reduce goodwill by $ 20.2 million, of which $ 21.0 million reflected a reduction of the estimated settlement amounts associated with an acquired liability from $ 61.0 million to $ 40.0 million, and $ 0.8 million reflected other immaterial adjustments related to assets and liabilities previously unrecognized.

The acquired liability was previously reported as a component of other non-current liabilities and was reclassified to "other current liabilities" as of March 31, 2025 due to the estimated timing of settlement.

During the six months ended June 30, 2025, the Company reassessed its estimates and inputs as new information about facts and circumstances that existed as of the acquisition date became known.

As a result, the Company recorded a $ 23.0 million reduction in goodwill as a measurement period adjustment.

The reduction to goodwill consists of a $ 21.0 million adjustment reflecting a reduction of the estimated settlement amounts associated with an acquired liability from $ 61.0 million to $ 40.0 million and a $ 2.0 million net increase in assets acquired.

In the process, the Company also recorded a $ 8.7 million increase to goodwill as a result of recording an assumed liability associated with certain accrued personnel obligations previously unrecognized on the provisional opening balance sheet.

The income statement impact, had those adjustments been made as of the acquisition date, was considered immaterial.

The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Marcum, with the excess recorded as goodwill (in thousands):

21 unchanged sentences

The preliminary purchase price allocation is subject to further refinement and may require adjustments to arrive at the final purchase price allocation.

The above fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the reporting date.

The above fair value of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the reporting date.

The final determination of the fair value of certain assets and liabilities will be completed as soon as the necessary information, such as final working capital adjustments, becomes available but no later than one year from the acquisition date.

5 unchanged sentences

Receivables are charged-off against the allowance when the balance is deemed uncollectible.

Accounts receivable, net, at March 31, 2025 and December 31, 2024 was as follows (in thousands):

Accounts receivable, net, at June 30, 2025 and December 31, 2024 was as follows (in thousands):

2025 December 31,

4 unchanged sentences

Accounts receivable, net $ 676,054 $ 534,858

Changes to the allowance for doubtful accounts for the three months ended March 31, 2025 and year ended December 31, 2024 were as follows (in thousands):

Changes to the allowance for doubtful accounts for the six months ended June 30, 2025 and year ended December 31, 2024 were as follows (in thousands):

2025 December 31,

4 unchanged sentences

DEBT AND FINANCING ARRANGEMENTS

2024 Credit Facilities - As of March 31, 2025, our primary financing arrangement is the 2024 Credit Facilities, which provides $ 2.0 billion in senior secured credit facilities, consisting of a $ 1.4 billion term loan (the “Term Loan”) and $ 600.0 million revolving credit facility (the “Revolving Credit Facility”).

The 2024 Credit Facilities amend and restate the 2022 credit facility entered into on May 4, 2022 (the "2022 Credit Facility").

2024 Credit Facilities - Our primary debt financing arrangement is the Amended and Restated Credit Agreement, dated as of November 1, 2024, as amended by the First Amendment, dated as of March 7, 2025, by and among the Company, CBIZ, Inc.

as the borrower, the lenders party thereto from time to time and Bank of America, N.A., as the agent, which provides $ 2.0 billion in senior secured credit facilities, consisting of term loans with an original principle amount of $ 1.4 billion (the “Term Loan”) and a $ 600.0 million revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan, as may be further amended, restated, supplemented or otherwise modified from time to time, the "2024 Credit Facilities").

On April 29, 2025, the Company entered into a Second Amendment (the "Debt Amendment") to the 2024 Credit Facilities.

The Debt Amendment added a usual and customary "Available Amount" basket available for making of certain investments and/or restricted payments (including share repurchases) from time to time subject to the satisfaction of certain terms and conditions set forth therein and made certain other technical changes.

The changes from the Debt Amendment have been accounted for as a modification under ASC 470, Debt ("ASC 470") and had an immaterial impact to the financial statements.

Th e 2024 Credit Facilities mature on November 1, 2029.

The Term Loan provides for scheduled annual principal amortization payments of 5 % in the first two years following closing, 7.5 % annually in the third and fourth year following closing and 10 % in the fifth year following closing, with the balance due at maturity.

The 2024 Credit Facilities contain certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens or other encumbrances, making certain payments, investments, or to sell or otherwise dispose of a substantial portion of assets, or to merge or consolidate with an unaffiliated entity.

The 2024 Credit Facilities also limits our ability to make dividend payments.

The 2024 Credit Facilities contains certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens or other encumbrances, making certain payments, investments, or to sell or otherwise dispose of a substantial portion of assets, or to merge or consolidate

with an unaffiliated entity.

The 2024 Credit Facilities also limit our ability to make dividend payments.

Historically, we have not paid cash dividends on our common stock.

Our Board of Directors has discretion over the payment and level of dividends on common stock, subject to the limitations of the 2024 Credit Facilities and applicable law.

Our Board of Directors has discretion over the payment and level of dividends on our common stock, subject to the limitations of the 2024 Credit Facilities and applicable law.

The 2024 Credit Facilities contain a provision that, in the event of a defined change in control, the 2024 Credit Facilities may be terminated.

In addition, the 2024 Credit Facilities include a financial covenant requiring that Total Net Leverage Ratio not exceed 5.00 to 1.00 initially, stepping down in increments to 3.75 to 1.00 during and after the seventh fiscal quarter after the closing (with a limited ability to temporarily increase in connection with material acquisitions commencing in the sixth fiscal quarter after the closing).

The 2024 Credit Facilities also require a Minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 and affirmative and negative covenants that are in each case generally similar to those contained in the 2022 Credit Facility, but with increases to certain baskets and caps and certain other exceptions.

As of March 31, 2025 , we are in compliance with all covenants.

The balance outstanding under the 2024 Credit Facilities at March 31, 2025 and December 31, 2024 was as follows (in thousands):

March 31, 2025 December 31, 2024

In addition, the 2024 Credit Facilities includes a financial covenant requiring that Total Net Leverage Ratio not exceed 5.00 to 1.00 initially, stepping down in increments to 3.75 to 1.00 during and after the seventh fiscal quarter after the closing (with a limited ability to temporarily increase in connection with material acquisitions commencing in the sixth fiscal quarter after the closing).

The 2024 Credit Facilities also require a Minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 and affirmative and negative covenants that are in each case generally similar to those contained in our previous amended and stated 2022 credit facility, but with increases to certain baskets and caps and certain other exceptions.

As of June 30, 2025 , we were in compliance with all covenants.

The balance outstanding under the 2024 Credit Facilities at June 30, 2025 and December 31, 2024 was as follows (in thousands):

June 30, 2025 December 31, 2024

Short-term debt

1 unchanged sentence

Current portion debt issuance costs, Term Loan ( 3,726 ) ( 3,823 )

Total short-term debt, net $ 66,226 $ 66,177

Total short-term debt $ 66,274 $ 66,177

Long-term debt

3 unchanged sentences

Long Term Portion Debt Issuance Costs, Term Loan ( 8,143 ) ( 9,985 )

Total long-term debt, net $ 1,462,504 $ 1,333,755

The blended effective interest rates under the 2024 Credit Facilities and the 2022 Credit Facility, including the impact of interest rate swaps associated with those credit facilities, for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended

Total long-term debt $ 1,488,215 $ 1,333,755

The blended effective interest rates under the 2024 Credit Facilities and the 2022 Credit Facility, including the impact of interest rate swaps associated with those credit facilities, for the six months ended June 30, 2025 and 2024 were as follows:

Six Months Ended

Weighted average rates 6.67 % 5.41 %

1 unchanged sentence

1.93 % - 6.83 %

We had approximately $ 384 million of available funds under the 2024 Credit Facilities at March 31, 2025, based on the terms of the commitment.

We had approximately $ 370 million of available funds under the 2024 Credit Facilities at June 30, 2025, based on the terms of the commitment.

Available funds under the 2024 Credit Facilities are based on a multiple of earnings before interest, taxes, depreciation and amortization as defined in the 2024 Credit Facilities, and are reduced by letters of credit, other indebtedness and outstanding borrowings under the 2024 Credit Facilities.

Under the 2024 Credit Facilities, loans are charged an interest rate consisting of a base rate or term SOFR rate plus an applicable margin, letters of credit are charged based on the same applicable margin, and a commitment fee is charged on the unused portion of the 2024 Credit Facilities.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the 2024 Credit Facilities.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the 2024 Credit Facilities and the 2022 credit facility.

Other Line of Credit - We have an unsecured $ 20.0 million line of credit by and among CBIZ Benefits and Insurance, Inc.

and Huntington National Bank.

We utilize this line to support our short-term funding requirements of payroll client fund obligations due to the investment of client funds, rather than liquidating client funds that have already been invested in available-for-sale securities.

The line of credit did no t have a balance outstanding at March 31, 2025 and December 31, 2024.

On August 1, 2024, we renewed the line of credit and it will now terminate on July 31, 2025.

Interest Expense - Interest expense, including amortization of deferred financing costs, commitment fees, line of credit fees, and other applicable bank charges, for the three months ended March 31, 2025 and 2024 was $ 25.2 million and $ 4.5 million, respectively.

and Huntington National Bank ("line of credit").

We utilize this line of credit to support our short-term funding requirements of payroll client fund obligations due to the investment of client funds, rather than liquidating client funds that have already been invested in available-for-sale

The line of credit did no t have a balance outstanding at June 30, 2025 or December 31, 2024.

The line of credit was renewed in July 2025 and will now terminate on July 30, 2026.

Interest Expense - Interest expense, including amortization of deferred financing costs, commitment fees, line of credit fees, and other applicable bank charges, for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):

Three months ended June 30, Six months ended June 30,

2025 2024 2025 2024

Credit facilities $ 27,862 $ 5,881 $ 53,018 $ 10,392

Other 5 3 5 3

Total $ 27,867 $ 5,884 $ 53,023 $ 10,395

COMMITMENTS AND CONTINGENCIES

Letters of Credit and Guarantees - We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled $ 3.2 million and $ 3.2 million at March 31, 2025 and December 31, 2024, respectively.

In addition, we provide license bonds to various state agencies to meet certain licensing requirements.

The amount of license bonds outstanding was $ 2.2 million and $ 2.2 million at March 31, 2025 and December 31, 2024, respectively.

The amount of license bonds outstanding was $ 2.2 million and $ 2.2 million at June 30, 2025 and December 31, 2024, respectively.

Legal Proceedings - On December 19, 2016, CBIZ Operations, Inc.

1 unchanged sentence

After various amendments, the lawsuit asserted claims under Indiana law for securities, statutory and common law fraud or deception, unjust enrichment, breach of contract, and vicarious liability against CBIZ Operations and a former employee of CBIZ MMP in connection with the sale of the CBIZ MMP medical billing practice to Zotec.

The plaintiff claimed that CBIZ Operations had a duty to disclose the fact, unknown to employees of CBIZ Operations at the time of the transaction, that the former employee had a financial arrangement with a Zotec vendor at the time CBIZ Operations sold CBIZ MMP to Zotec.

The plaintiff claimed that CBIZ Operations had a duty to disclose the fact, unknown to employees of CBIZ Operations at the time of the transaction, that the former employee of CBIZ MMP had a financial arrangement with a Zotec vendor at the time CBIZ Operations sold CBIZ MMP to Zotec.

The plaintiff sought damages of up to $ 177.0 million out of the $ 200.0 million transaction price.

8 unchanged sentences

The Court of Appeals reversed the award to CBIZ on its counterclaim.

Both CBIZ and Zotec opted against appealing this decision, rendering the decision final.

On November 10, 2023, CBIZ was named as a defendant in a putative class action lawsuit in the United States District Court for the District of Massachusetts by an individual claiming to be an employee of a CBIZ client whose personally identifiable information (“PII”) was compromised and stolen during a cyberattack CBIZ experienced on or about May 31, 2023.

5 unchanged sentences

MOVEit Customer Data Security Breach Litigation, pending in the United States District Court for the District of Massachusetts (the “MDL”).

To date, the MDL has over 180 cases against over 100 different defendants, all with claims arising out of the cyberbreach by hackers of Progress Software Corporation’s MOVEit Transfer software.

To date, the MDL has over 180 cases against over 100 different defendants, all with claims arising out of the cyberbreach by hackers of Progress Software Corporation’s MOVEit Transfer

The cases in the MDL, including the cases against CBIZ, are in their earliest stages, with a stay in place until the MDL Court issues a scheduling order.

Due to the early stage of litigation, the Company is not able to determine or predict the ultimate outcome of these lawsuits nor reasonably provide an estimate or range of the possible outcome or losses, if any.

In June of 2025, the Company settled litigation against a small group of former employees.

As part of the settlement of that litigation, the Company received a settlement payment of $ 12.5 million, which was recorded as a pre-tax gain in “Other income, net” on the consolidated statements of comprehensive income for the three and six months ended June 30, 2025.

In addition to the items disclosed above, the Company is, from time to time, subject to claims and lawsuits arising in the ordinary course of business.

6 unchanged sentences

These investments, primarily consisting of corporate and municipal bonds, are classified as available-for-sale and are included in the “Funds held for clients” line item on the accompanying unaudited Condensed Consolidated Balance Sheets.

The par value of these investments totaled $ 41.0 million and $ 41.3 million at March 31, 2025 and December 31, 2024, respectively, and these investments have maturity or callable dates ranging from April 2025 through February 2028.

At March 31, 2025, unrealized losses on the securities were not material and have not been recognized as a credit loss because the bonds are investment grade quality and management is not required or does not intend to sell prior to an expected recovery in value.

The par value of these investments totaled $ 39.0 million and $ 41.3 million at June 30, 2025 and December 31, 2024, respectively, and these investments have maturity or callable dates ranging from July 2025 through February 2028.

At June 30, 2025, unrealized losses on the securities were not material and have not been recognized as a credit loss because the bonds are investment grade quality and management is not required or does not intend to sell prior to an expected recovery in value.

The bond issuers continue to make timely principal and interest payments.

The following table summarizes activities related to these investments for the three months ended March 31, 2025 and the year ended December 31, 2024 (in thousands):

Three Months Ended March 31, 2025 Year Ended December 31, 2024

The following table summarizes activities related to these investments for the six months ended June 30, 2025 and the year ended December 31, 2024 (in thousands):

Six Months Ended June 30, 2025 Year Ended December 31, 2024

Fair value at beginning of period $ 40,999 $ 39,459

5 unchanged sentences

Fair value at end of period $ 38,911 $ 40,999

In addition to the available-for-sale debt securities discussed above, we also held other depository assets in the amount of $ 0.2 million and $ 0.2 million at March 31, 2025 and December 31, 2024, respectively.

In addition to the available-for-sale debt securities discussed above, we also held other depository assets in the amount of $ 2.4 million and $ 0.2 million at June 30, 2025 and December 31, 2024, respectively.

Those depository assets are classified as Level 1 in the fair value hierarchy.

2 unchanged sentences

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on our interest rate swaps.

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying unaudited Condensed Consolidated Balance Sheets at March 31, 2025 and December 31, 2024 (amounts in thousands):

March 31, 2025

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying unaudited Condensed Consolidated Balance Sheets at June 30, 2025 and December 31, 2024 (amounts in thousands):

June 30, 2025

Amount Fixed Rate Expiration Fair

Value Balance Sheet Location

Interest rate swap $ 50,000 0.834 % 4/14/2025 $ 67 Other current asset

Interest rate swap $ 30,000 1.186 % 12/14/2026 $ 1,027 Other non-current asset

2 unchanged sentences

Interest rate swap $ 25,000 4.488 % 10/14/2028 $ ( 864 ) Other non-current liability

Interest rate swap $ 50,000 3.703 % 3/14/2030 $ ( 702 ) Other non-current liability

Interest rate swap $ 50,000 3.503 % 4/14/2030 $ ( 285 ) Other non-current liability

Interest rate swap (1)

$ 50,000 3.680 % 7/14/2030 $ ( 636 ) Other non-current liability

(1) Entered into during the first quarter of 2025.

Interest rate swap (1)

$ 50,000 3.680 % 7/15/2030 $ ( 681 ) Other non-current liability

(1) Entered into during the second quarter of 2025.

December 31, 2024

7 unchanged sentences

Refer to Note 8, Fair Value Measurements, for additional disclosures regarding fair value measurements.

The following table summarizes the effects of the interest rate swaps on the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2025 and 2024 (in thousands):

The following table summarizes the effects of the interest rate swaps on the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024 (in thousands):

Gain (Loss) Recognized

2 unchanged sentences

Three Months Ended

March 31, Three Months Ended

June 30, Three Months Ended

2025 2024 2025 2024

Interest rate swaps $ ( 1,719 ) $ 587 $ 594 $ 1,174

Gain (Loss) Recognized

in AOCI, net of tax Gain Reclassified

from AOCI into Expense

Six months ended June 30, Six months ended June 30,

2025 2024 2025 2024

Interest rate swaps $ ( 2,436 ) $ 2,441 $ 1,373 $ 2,365

FAIR VALUE MEASUREMENTS

The following table summarizes our assets and (liabilities) at March 31, 2025 and December 31, 2024, respectively, that are measured at fair value on a recurring basis subsequent to initial recognition and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands):

Level March 31, 2025 December 31, 2024

The following table summarizes our assets and (liabilities) at June 30, 2025 and December 31, 2024, respectively, that are measured at fair value on a recurring basis subsequent to initial recognition and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands):

Level June 30, 2025 December 31, 2024

Assets of deferred compensation plan 1 $ 177,150 $ 167,170

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Contingent purchase price liabilities 3 $ ( 48,733 ) $ ( 96,967 )

During the three months ended March 31, 2025 and 2024, there were no transfers between the valuation hierarchy Levels 1, 2 and 3.

The following table summarizes the change in Level 3 fair values of our contingent purchase price liabilities for the three months ended March 31, 2025 and 2024 (pre-tax basis, in thousands):

During the six months ended June 30, 2025 and 2024, there were no transfers between the valuation hierarchy Levels 1, 2 and 3.

The following table summarizes the change in Level 3 fair values of our contingent purchase price liabilities for the six months ended June 30, 2025 and 2024 (pre-tax basis, in thousands):

Beginning balance – December 31 $ ( 96,967 ) $ ( 114,946 )

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Change in net present value of contingencies ( 1,657 ) ( 1,061 )

Ending balance – March 31 $ ( 65,963 ) $ ( 94,186 )

The following table summarizes the changes in contingent purchase price consideration for previous acquisitions and contingent payments made for previous business acquisitions in the three months ended March 31, 2025 and 2024, respectively (in thousands):

Three Months Ended March 31,

Ending balance – June 30 $ ( 48,733 ) $ ( 83,839 )

The following table summarizes the changes in contingent purchase price consideration for previous acquisitions and contingent payments made for previous business acquisitions in the three and six months ended June 30, 2025 and 2024, respectively (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net expense $ 1,020 $ 204 $ 1,487 $ 638

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OTHER COMPREHENSIVE INCOME

The following table is a summary of other comprehensive income and discloses the tax impact of each component of other comprehensive (loss) income for the three months ended March 31, 2025 and 2024 (in thousands):

The following table is a summary of other comprehensive income and discloses the tax impact of each component of other comprehensive (loss) income for the three and six months ended June 30, 2025 and 2024 (in thousands):

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Net unrealized gain on available-for-sale securities, net of taxes (1)

$ 51 $ 167 $ 123 $ 223

Net unrealized (loss) gain on interest rate swaps, net of taxes (2)

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Total other comprehensive (loss) income, net of tax $ ( 2,115 ) $ ( 142 ) $ ( 3,350 ) $ 876

(1) Net of income tax expense of $ 29 and $ 21 for the three months ended March 31, 2025 and 2024, respectively.

(2) Net of income tax benefit of $ 434 and income tax expense of $ 322 for the three months ended March 31, 2025 and 2024, respectively.

(1) Net of income tax expense of $ 22 and $ 68 for the three months ended June 30, 2025 and 2024, respectively.

Net of income tax expense of $ 51 and $ 89 for the six months ended June 30, 2025 and 2024, respectively.

(2) Net of income tax benefit of $ 722 and $ 99 for the three months ended June 30, 2025 and 2024, respectively.

Net of income tax benefit of $ 1,156 and income tax expense of $ 223 for the six months ended June 30, 2025 and 2024, respectively.

Common Stock Issued for the Transaction - Pursuant to the Agreement and Plan of Merger, dated as of July 30, 2024, by and among the Company, Marcum and the other parties thereto (the “Merger Agreement”) and as part of the total purchase price consideration we issued shares to the selling shareholders in the Transaction.

Refer to Note 3, Business Combinations, for more detail.

Right of First Refusal Program - Pursuant to the Merger Agreement, the Company and selling shareholders entered into a Right of First Refusal Agreement (the “ROFR Agreement”).

Under the ROFR Agreement, the selling shareholders granted the Company a right of first refusal to repurchase all or any portion of our common stock issued to the selling shareholders pursuant to the Merger Agreement.

The Company holds the right of first refusal until November 1, 2028.

Share Repurchase Program - Over the past twenty years , our Board of Directors has annually renewed the Company’s share repurchase program, which permits the Company to repurchase, in accordance with SEC rules, up to 5 million shares of our outstanding common stock (i) in the open market, (ii) in privately negotiated transactions, or (iii) under Rule 10b5-1 trading plans (the “Share Repurchase Program”).

The Board of Directors authorized the Share Repurchase Program on February 7, 2024, permitting repurchases through March 31, 2025, and February 11, 2025, permitting repurchases through March 31, 2026.

Privately negotiated transactions may include repurchases from employees, officers and directors and repurchases from former partners of Marcum pursuant to the ROFR Agreement, as discussed above.

Refer to Note 14, Common Stock, to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024 for more detail about the Share Repurchase Program.

We repurchased 1.0 million shares of our common stock at of $ 71.3 million under the ROFR Agreement during the six months ended June 30, 2025.

Additionally, to settle statutory employee withholding related to vesting of stock awards, we repurchased 0.1 million shares of our common stock at cost of $ 7.8 million during the six months ended June 30, 2025 and 0.2 million shares at a cost of $ 11.2 million during the six months ended June 30, 2024.

EMPLOYEE STOCK PLANS

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Shares subject to award under the 2019 Plan may be either authorized but unissued shares of our common stock or treasury shares.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the 2019 Plan.

Compensation expense for stock-based awards recognized during the three months ended March 31, 2025 and 2024 was as follows (in thousands):

Refer to Note 15, Employee Stock Plans to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the 2019 Plan.

Compensation expense for stock-based awards recognized during the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Restricted stock units and awards $ 5,289 $ 1,552 $ 10,148 $ 2,903

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Total stock-based compensation expense $ 6,600 $ 2,378 $ 12,239 $ 5,016

Stock Options and Restricted Stock Units and Awards – The Company did no t grant any stock options, no r were any stock options exercised during the three months ended March 31, 2025.

As of March 31, 2025, we have 150 thousand stock options outstanding with a weighted average exercise price per share of $ 35.22 .

The following table presents our restricted stock units and awards activity during the three months ended March 31, 2025 (in thousands, except per share data):

Stock Options and Restricted Stock Units and Awards – The Company did no t grant any stock options, no r were any stock options exercised during the six months ended June 30, 2025.

As of June 30, 2025, we have 150 thousand stock options outstanding with a weighted average exercise price per share of $ 35.22 .

The following table presents our restricted stock units and awards activity during the six months ended June 30, 2025 (in thousands, except per share unit data):

Restricted Stock Units and Awards

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Expired or canceled ( 8 ) $ 80.59

Outstanding at March 31, 2025 929 $ 70.20

Outstanding at June 30, 2025 922 $ 70.37

(1) Represents weighted average market value of the shares;

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For the PSUs granted in 2025, the recipients may earn additional shares of stock, not to exceed 300 % of the number of PSUs initially granted if performance achieved above specified levels.

The following table presents our PSUs activity during the three months ended March 31, 2025 (in thousands, except per share data):

The following table presents our PSUs activity during the six months ended June 30, 2025 (in thousands, except per share unit data):

Share Units Weighted

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Adjustments for performance results ( 3 ) $ 38.12

Outstanding at March 31, 2025 239 $ 65.80

Outstanding at June 30, 2025 239 $ 65.80

(1) Represents weighted average market value of the PSUs;

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EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2025 and 2024 (in thousands, except per share data):

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2025 and 2024 (in thousands, except per share data):

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Net Income $ 41,942 $ 19,793 $ 164,715 $ 96,677

Weighted average common shares outstanding (1)

63,542 50,111 63,692 50,079

Stock options (2)

Restricted stock units and awards (2)

165 73 187 80

Contingent shares (3)

Diluted weighted average common shares

outstanding (3)

Diluted weighted average common shares outstanding (4)

63,784 50,276 63,960 50,248

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Diluted earnings per share $ 0.66 $ 0.39 $ 2.58 $ 1.92

(1) A total of 44 thousand and 40 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for three months ended March 31, 2025 and 2024 , respectively, as their effect would be anti-dilutive.

(1) A total of 13.6 million shares that were issued as consideration in connection with the Transaction are included for the three and six months ended June 30, 2025.

Refer to Note 3, Business Combinations for more detail.

(2) A total of 63 thousand and 79 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2025, as their effect would be anti-dilutive.

A total of 9 thousand and 96 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2024,as their effect would be anti-dilutive.

(3) Contingent shares represent additional shares to be issued for purchase price earned by former owners of businesses acquired by us once future conditions have been met.

(3) The denominator used in calculating diluted earnings per share did not include 239 thousand and 254 thousand PSUs for both the three months ended March 31, 2025, and 2024, respectively.

The performance conditions associated with these PSUs were not met and consequently none of these PSUs were considered as issuable for the three months ended March 31, 2025 and 2024.

(4) The denominator used in calculating diluted earnings per share did not include 239 thousand and 254 thousand PSUs for both the three and six months ended June 30, 2025, and 2024, respectively.

The performance conditions associated with these PSUs were not met and consequently none of these PSUs were considered as issuable for the three and six months ended June 30, 2025 and 2024.

SEGMENT DISCLOSURES

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Performance of the practice groups is evaluated on income (loss) before income tax expense (benefit) excluding those costs listed above, which are reported in “Corporate and Other”.

The practice groups respective revenue and pre-tax income, significant segment expenses, and a reconciliation of segment profit or loss measure to the consolidated income before income tax expense for the three months ended March 31, 2025 and 2024 is presented below.

The practice groups respective revenue and pre-tax income, significant segment expenses, and a reconciliation of segment profit or loss measure to the consolidated income before income tax expense for the three and six months ended June 30, 2025 and 2024 is presented below.

We do not manage our assets on a segment basis, therefore segment assets are not presented below.

Segment information for the three months ended March 31, 2025 and 2024 was as follows (in thousands):

Three months ended March 31, 2025

Segment information for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):

Three months ended June 30, 2025

Services Benefits and

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Total segment expense 484,484 83,961 10,481 578,926

Segment income before income tax expenses 203,353 27,945 1,112 232,410

Segment income before income tax expense 85,335 17,968 1,267 104,570

Corporate & other:

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Interest expense 27,867

Other expense, net 2,477

Consolidated income before income tax expenses $ 172,910

Three Months Ended March 31, 2024

Other income, net ( 25,351 )

Consolidated income before income tax expense $ 57,779

Three Months Ended June 30, 2024

Services Benefits and

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Total segment expense 262,681 83,200 12,032 357,913

Segment income before income tax expenses 107,155 24,815 1,326 133,296

Segment income before income tax expense 46,552 14,219 1,328 62,099

Corporate & other:

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Other income, net ( 2,316 )

Consolidated income before income tax expenses $ 104,014

Consolidated income before income tax expense $ 28,193

Six months ended June 30, 2025

Services Benefits and

Services National

Practices Total

Revenue from external customers $ 1,283,480 $ 214,905 $ 23,125 $ 1,521,510

Significant expenses:

Personnel costs 789,570 131,743 20,512 941,825

Facility costs 47,346 6,403 5 53,754

Other costs, gains, and losses, net (1)

157,876 30,846 229 188,951

Total segment expense 994,792 168,992 20,746 1,184,530

Segment income before income tax expense 288,688 45,913 2,379 336,980

Corporate & other:

Unallocated corporate operating expenses 20,435

General & administrative expenses 55,707

Interest expense 53,023

Other income, net ( 22,874 )

Consolidated income before income tax expense $ 230,689

Six Months Ended June 30, 2024

Services Benefits and

Services National

Practices Total

Revenue from external customers $ 681,863 $ 205,827 $ 26,619 $ 914,309

Significant expenses:

Personnel costs 429,603 131,158 22,843 583,604

Facility costs 23,845 6,244 125 30,214

Other costs, gains, and losses, net (1)

74,708 29,391 997 105,096

Total segment expense 528,156 166,793 23,965 718,914

Segment income before income tax expense 153,707 39,034 2,654 195,395

Corporate & other:

Unallocated corporate operating expenses 23,642

General & administrative expenses 40,761

Interest expense 10,395

Other income, net ( 11,610 )

Consolidated income before income tax expense $ 132,207

(1) Other costs, gains, and losses, net primarily consist of travel and entertainment costs, computer and technology related costs, depreciation and amortization expenses, and other discretionary costs.

SUBSEQUENT EVENTS

On April 14, 2025, we entered into a 5-year interest rate swap with a notional value of $ 50 million and a fixed rate of 3.503 %.

The interest rate swap expires on April 14, 2030.

On July 4, 2025, the U.S.

government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S.

corporate income tax system such as permanent extensions of certain expiring provisions of the Tax Cuts and Jobs Act and restoration of favorable tax

treatment for certain business provisions.

Certain provisions are effective for us beginning in 2025.

We are currently assessing its impact on our consolidated financial statements.

On July 9, 2025, we entered into an 18-month interest rate swap with a notional value of $ 100 million and a fixed rate of 3.85 %.

The interest rate swap expires on January 14, 2027.

On July 15, 2025, we entered into a 1-year interest rate swap with a notional value of $ 100 million and a fixed rate of 4.047 %.

The interest rate swap expires on July 14, 2026.

Subsequent to June 30, 2025 and up to July 25, we repurchase approximately 0.3 million shares of our common stock under the ROFR Agreement at a total cost of approximately $ 25.3 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements