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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-04-30 · 300 added, 149 removed, 210 unchanged (68% of the section changed)

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Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we," “us," “our," "CBIZ" or the "Company" shall mean CBIZ, Inc., and its operating subsidiaries.

The following discussion is intended to assist in the understanding of our financial position at March 31, 2026 and December 31, 2025, results of operations for the three months ended March 31, 2026 and 2025, and cash flows for the three months ended March 31, 2026 and 2025, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025.

The following discussion is intended to assist in the understanding of our financial position at June 30, 2026 and December 31, 2025, results of operations for the three and six months ended June 30, 2026 and 2025, and cash flows for the six months ended June 30, 2026 and 2025, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025, as amended.

This discussion and analysis contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in “Item 1A.

Risk Factors” included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025.

Risk Factors” included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended.

We provide professional business services, products and solutions that help our clients grow and succeed by better managing their finances and employees.

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Financial Services and Benefits and Insurances Services.

Financial results of the Financial Service Practice Group for the three months ended March 31, 2025 were adjusted to reflect the change in reportable segments.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of our business and strategies, as well as the external relationships and regulatory factors that currently impact our operations.

Financial results of the Financial Service Practice Group for the three and six months ended June 30, 2025 were adjusted to reflect the change in reportable segments.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2025, as amended, for further discussion of our business and strategies, as well as the external relationships and regulatory factors that currently impact our operations.

PROPOSED MERGER

On July 28, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Viking ParentCo., Inc.

a Delaware corporation (“Parent”), and Viking MergerCo, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the proposed Merger as a direct wholly owned subsidiary of Parent.

Pursuant to the Merger Agreement, upon the consummation of the proposed Merger transaction, each share of common stock, par value $0.01 per share, of the Company (the “Shares” and each a “Share”) issued and outstanding immediately prior to the effective time of the Merger (other than certain excluded shares as set forth in the Merger Agreement) will be converted into the right to receive $55.00 per share in cash, without interest thereon (the “Merger Consideration”).

The Merger Agreement also provides for the treatment of the Company’s outstanding equity awards in accordance with its terms upon consummation of the proposed Merger.

See Note 16, “Subsequent Events” in Item 1 of this Form 10-Q for further details regarding the proposed Merger.

See the section titled, “Risk Factors” included under Part II, Item 1A of this Report for more information regarding risks associated with the proposed Merger.

EXECUTIVE SUMMARY

Revenue for the three months ended March 31, 2026 increased by $10.6 million, or 1.3%, to $848.6 million from $838.0 million for the same period in 2025.

Revenue for the three months ended June 30, 2026 decreased by $1.3 million, or 0.2%, to $682.2 million from $683.5 million for the same period in 2025.

Same-unit revenue decreased by approximately $3.5 million, or 0.5%, as compared to the same period in 2025.

Revenue from newly acquired operations contributed $2.2 million of incremental revenue for the three months ended June 30, 2026, as compared to the same period in 2025.

A detailed discussion of revenue for the three months ended June 30, 2026 by practice group is included under "Operating Practice Groups."

Revenue for the six months ended June 30, 2026 increased by $9.3 million, or 0.6%, to $1,530.8 million from $1,521.5 million for the same period in 2025.

Same-unit revenue increased by approximately $5.0 million or 0.3%, as compared to the same period in 2025.

Revenue from newly acquired operations contributed $2.1 million of incremental revenue for the three months ended March 31, 2026, as compared to the same period in 2025.

A detailed discussion of revenue by practice group is included under "Operating Practice Groups."

For the three months ended March 31, 2026, net income was $161.6 million, or $2.63 per diluted share, compared to $122.8 million, or $1.91 per diluted share, for the same period in 2025.

Revenue from newly acquired operations contributed $4.3 million of incremental revenue for the six months ended June 30, 2026, as compared to the same period in 2025.

A detailed discussion of revenue for the six months ended June 30, 2026 by practice group is included under "Operating Practice Groups."

For the three months ended June 30, 2026, net income was $18.6 million, or $0.31 per diluted share, compared to $41.9 million, or $0.66 per diluted share, for the same period in 2025.

For the six months ended June 30, 2026, net income was $171.4 million, or $2.83 per diluted share, compared to $164.7 million, or $2.58 per diluted share, for the same period in 2025.

Refer to “Results of Operations" for a detailed discussion of the components of net income.

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This includes investments in client service delivery and emerging technology that support revenue growth and enhance operational excellence.

Following the completion of the Transaction, our second priority is to pay down debt to be at a net leverage ratio of less than 2.5x over time.

As a result of the Transaction and related 2024 Credit Facilities, we have $1,551.5 million of outstanding debt under the 2024 Credit Facilities as of March 31, 2026.

Following the completion of the Marcum Transaction, our second priority is to pay down debt to be at a net leverage ratio of less than 2.5x over time.

As a result of the Marcum Transaction and related 2024 Credit Facilities, we have $1,473.5 million of outstanding debt under the 2024 Credit Facilities as of June 30, 2026.

In addition, we believe that repurchasing shares of our common stock can be an attractive use of capital and an efficient means to provide value to our stockholders.

We will also remain focused on making strategic acquisitions that allow us to strengthen our presence in existing markets, expand into high growth industries, and broaden our services to our clients.

During the three months ended March 31, 2026, we repurchased 0.1 million shares of our common stock for a total cost of $3.5 million under the ROFR Agreement and 1.0 million shares of our common stock in the open market for $25.5 million pursuant to our Share Repurchase Program (defined below).

Additionally, to settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares of our common stock at a cost of

$2.6 million during the three months ended March 31, 2026.

During the three months ended March 31, 2025, we made no share repurchases under the ROFR Agreement or in the open market.

To settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares at a cost of $7.7 million during the three months ended March 31, 2025.

During the six months ended June 30, 2026, we repurchased 0.2 million shares of our common stock for a total cost of $7.4 million under the ROFR Agreement and 2.1 million shares of our common stock in the open market for $60.1 million pursuant to our Share Repurchase Program (defined below).

Additionally, to settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares of our common stock at a cost of $2.6 million during the six months ended June 30, 2026.

During the six months ended June 30, 2025, we repurchased 1.0 million shares of our common stock for a cost of $71.3 million under the ROFR Agreement and no share repurchases from the open market.

To settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares at a cost of $7.8 million during the six months ended June 30, 2025.

Refer to Note 11, Common Stock, to the accompanying unaudited condensed consolidated financial statements for further details.

On February 11, 2026, the CBIZ Board of Directors authorized the purchase of up to 5.0 million shares of our common stock under our share repurchase program (the “Share Repurchase Program”), which may be suspended or discontinued at any time and expires on March 31, 2027.

or discontinued at any time and expires on March 31, 2027.

The shares may be purchased in the open market, in privately negotiated transactions, and pursuant to Rule 10b5-1 trading plans.

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RESULTS OF OPERATIONS

The following tables summarize total revenue for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

The following tables summarize total revenue for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Total 2025 (1)

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Total CBIZ $ 682,206 100.0 % $ 683,496 100.0 % $ (1,290) (0.2) %

(1) During the three months ended March 31, 2026, the National Practice practice group was combined with the Financial Service practice group to better align with internal management and reporting structure.

As a result, the Financial Services revenue for the three months ended March 31, 2025 was adjusted to reflect this change.

Six Months Ended June 30,

Total 2025 (1)

(Amounts in thousands, except percentages)

Financial Services $ 1,320,654 86.3 % $ 1,306,605 85.9 % $ 14,049 1.1 %

Benefits and Insurance Services 210,131 13.7 % 214,905 14.1 % (4,774) (2.2) %

Total CBIZ $ 1,530,785 100.0 % $ 1,521,510 100.0 % $ 9,275 0.6 %

(1) During the six months ended June 30, 2026, the National Practice practice group was combined with the Financial Service practice group to better align with internal management and reporting structure.

As a result, the Financial Services revenue for the three and six months ended June 30, 2025 was adjusted to reflect this change.

Non-qualified Deferred Compensation Plan

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The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share.

Refer to Note 13, Employee Benefits, to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion on the Non-qualified Deferred Compensation Plan.

Losses related to the deferred compensation plan assets for the three months ended March 31, 2026 and 2025 were recorded as follows (in thousands, except percentages):

Three Months Ended March 31,

Refer to Note 13, Employee Benefits, to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, for further discussion on the Non-qualified Deferred Compensation Plan.

Income and expenses related to the deferred compensation plan assets for the three and six months ended June 30, 2026 and 2025 were recorded as follows (in thousands, except percentages):

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

Income statement line items:

2026 2025 2026 2025

Operating expense $ 17,113 $ 11,717 $ 14,044 $ 9,285

Corporate general & administrative expense 2,298 1,458 1,979 1,339

Other expense, net 3,388 2,551

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended March 31, 2026 and 2025 were as follows:

Three Months Ended March 31,

Other income, net 19,411 13,175 16,023 10,624

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three and six months ended June 30, 2026 and 2025 were as follows:

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Operating income 34,072 19,411 53,483 7.8 % 60,272 13,175 73,447 10.7 %

Other expense, net (4,016) 3,388 (628) (0.1) % (1,966) 2,551 585 0.1 %

Other income, net 13,949 (19,411) (5,462) (0.8) % 25,374 (13,175) 12,199 1.8 %

Income before income tax expense 23,686 — 23,686 3.5 % 57,779 — 57,779 8.5 %

Six Months Ended June 30,

(Amounts in thousands, except percentages)

As Reported Deferred Compensation Plan Adjusted % of Revenue As Reported Deferred Compensation Plan Adjusted % of Revenue

Gross margin $ 298,455 $ 14,044 $ 312,499 20.4 % $ 316,011 $ 9,285 $ 325,296 21.4 %

Operating income 218,578 16,023 234,601 15.3 % 260,304 10,624 270,928 17.8 %

Other income, net 9,933 (16,023) (6,090) (0.4) % 23,408 (10,624) 12,784 0.8 %

Income before income tax expense 238,215 — 238,215 15.6 % 230,689 — 230,689 15.2 %

Operating Expenses

The following tables summarize total operating expenses for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

The following tables summarize total operating expenses for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30,

2026 2025 (1)

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compensation % of revenue 86.9 % 85.4 %

As a result, the Financial Services operating expenses for the three months ended March 31, 2025 was adjusted to reflect this change.

Three months ended March 31, 2026 compared to March 31, 2025 .

Total operating expenses for the three months ended March 31, 2026 increased by $12.7 million, or 2.1%, to $622.6 million as compared to $609.9 million in the same period in 2025.

The deferred compensation plan decreased operating expenses by $3.1 million for the three months ended March 31, 2026 and by $2.4 million during the same period in 2025.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $625.6 million and $612.3 million, or 73.7% and 73.1% of revenue, for the three months ended March 31, 2026 and 2025, respectively.

In addition, operating expense for the three months ended March 31, 2026 and 2025, included approximately $20.7 million and $9.0 million, respectively, of integration costs associated with the Transaction.

Six Months Ended June 30,

2026 2025 (1)

(Amounts in thousands, except percentages)

Operating expenses by segment:

Financial Services $ 1,030,582 $ 1,015,697 $ 14,885 1.5 %

Benefits and Insurance Services 171,529 169,365 2,164 1.3 %

Corporate and Other 30,219 20,437 9,782 47.9 %

Total Operating expenses $ 1,232,330 $ 1,205,499 $ 26,831 2.2 %

Operating expenses % of revenue 80.5 % 79.2 %

Operating expenses excluding deferred compensation $ 1,218,286 $ 1,196,214 $ 22,072 1.8 %

Operating expenses excluding deferred

compensation % of revenue 79.6 % 78.6 %

As a result, the Financial Services operating expenses for the three and six months ended June 30, 2025 was adjusted to reflect this change.

Three months ended June 30, 2026 compared to June 30, 2025.

Total operating expenses for the three months ended June 30, 2026 increased by $14.2 million, or 2.4%, to $609.8 million as compared to $595.6 million in the same period in 2025.

The deferred compensation plan increased operating expenses by $17.1 million for the three months ended June 30, 2026 and increased operating expenses by $11.7 million in the same period in 2025.

Excluding the deferred compensation expenses, which were recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $592.7 million and $583.9 million, or 86.9% and 85.4% of revenue, for the three months ended June 30, 2026 and 2025, respectively.

In addition, operating expenses for the three months ended June 30, 2026 included approximately $14.8 million of integration costs associated with the Marcum Transaction, and the operating expenses for the three months ended June 30, 2025 included approximately $11.1 million of integration costs associated with the Marcum Transaction.

The majority of our operating expenses relate to personnel costs, which include (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation, and (iv) stock-based compensation.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $13.3 million during the three months ended March 31, 2026 as compared to the same period in 2025, driven by $4.6 million higher facility costs, $2.7 million higher technology costs, $2.5 million higher direct costs, $1.8 million higher personnel costs, $1.1 million higher travel and entertainment costs, and $0.6 million higher professional service costs.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $8.8 million during the three months ended June 30, 2026 as compared to the same period in 2025, driven by $11.5 million higher personnel costs and $2.3 million higher direct costs, partially offset by $1.7 million lower depreciation and amortization costs, $2.9 million lower facility costs, and $3.4 lower professional service costs .

Personnel costs are discussed in further detail under “Operating Practice Groups” below.

Six months ended June 30, 2026 compared to June 30, 2025 .

Total operating expenses for the six months ended June 30, 2026 increased by $26.8 million, or 2.2%, to $1,232.3 million as compared to $1,205.5 million in the same period in 2025.

The deferred compensation plan increased operating expenses by $14.0 million for the six months ended June 30, 2026 and increased operating expenses by $9.3 million during the same period in 2025.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $1,218.3 million and $1,196.2 million, or 79.6% and 78.6% of revenue, for the six months ended June 30, 2026 and 2025, respectively.

In addition, operating expense for the six months ended June 30, 2026 and 2025, included approximately $38.7 million and $20.1 million, respectively, of integration costs associated with the Marcum Transaction.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $22.1 million during the six months ended June 30, 2026 as compared to the same period in 2025, driven by $13.3 million in higher personnel costs, $1.7 million higher facility costs, $3.0 million higher technology costs, $3.2 million higher direct costs, and $1.5 million higher travel and entertainment costs, partially offset by $2.8 million lower professional service costs.

Corporate General & Administrative (“G&A”) Expenses

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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G&A expenses excluding deferred compensation % of revenue 5.3 % 3.8 %

Three months ended March 31, 2026 compared to March 31, 2025.

The deferred compensation plan decreased G&A expenses by $0.3 million for the three months ended March 31, 2026, and by $0.1 million during the same period in 2025.

G&A expenses, excluding the impact of the deferred compensation plan, would have been $29.9 million, or 3.5% of revenue, for the three months ended March 31, 2026, compared to $28.2 million, or 3.4% of revenue, for the same period in 2025, an increase of $1.7 million.

The increase in G&A expenses was primarily due to approximately $1.2 million higher technology costs, $0.4 million higher facility costs, and $0.1 million higher other discretionary spending to support business growth.

The G&A expenses for the three months ended March 31, 2026 and 2025, included approximately $3.1 million and $6.7 million, respectively, of integration costs primarily associated with the Transaction.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

G&A expenses $ 79,877 $ 55,707 $ 24,170 43.4 %

G&A expenses % of revenue 5.2 % 3.7 %

G&A expenses excluding deferred compensation $ 77,898 $ 54,368 $ 23,530 43.3 %

G&A expenses excluding deferred compensation % of revenue 5.1 % 3.6 %

Three months ended June 30, 2026 compared to June 30, 2025.

The deferred compensation plan increased G&A expenses by $2.3 million for the three months ended June 30, 2026, and by $1.5 million during the same period in 2025.

The G&A expenses, excluding the impact of the deferred compensation plan, would have been $36.1 million, or 5.3% of revenue, for the three months ended June 30, 2026, compared to $26.2 million, or 3.8% of revenue, for the same period in 2025, an increase of approximately $9.9 million.

The increase was primarily driven by $4.8 million in higher personnel costs, $4.8 million higher professional services costs, $1.4 million higher marketing costs, and $1.4 million higher technology costs, partially offset by $0.5 million decrease in other discretionary costs.

The G&A expenses for the three months ended June 30, 2026 and 2025 included approximately $4.5 million and $8.1 million of integration costs primarily associated with the Marcum Transaction.

Six months ended June 30, 2026 compared to June 30, 2025.

The deferred compensation plan increased G&A expenses by $2.0 million for the six months ended June 30, 2026, and increased G&A expenses by $1.3 million during the same period in 2025.

G&A expenses, excluding the impact of the deferred compensation plan, would have been $77.9 million, or 5.1% of revenue, for the six months ended June 30, 2026, compared to $54.4 million, or 3.6% of revenue, for the same period in 2025, an increase of $23.5 million.

The increase in G&A expenses was primarily due to approximately $17.2 million of higher personnel costs driven by $10.9 million cumulative impact of the ESPP correction and higher compensation, $2.6 million higher technology costs, $2.0 million higher professional services costs, $0.6 million higher facility costs, and $2.6 million higher other discretionary spending to support business growth.

The G&A expenses for the six months ended June 30, 2026 and 2025, included approximately $7.6 million and $14.8 million, respectively, of integration costs primarily associated with the Marcum Transaction.

Other Income (Expense), Net

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

Interest expense $ (24,335) $ (27,867) $ 3,532 (12.7) %

Other income, net (1)

13,949 25,374 (11,425) (45.0) %

Total other expense, net $ (10,386) $ (2,493) $ (7,893) 316.6 %

(1) Other income, net includes a net gain of $19.4 million during the three months ended June 30, 2026, compared to a net gain of $13.2 million for the same period in 2025, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

The adjustments to the investments held in a rabbi trust related to the deferred compensation plan are offset by a corresponding increase or decrease to compensation expense, which is recorded as “Operating expenses” and “G&A expenses.” The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share.

In addition, included in other income (expense), net for the three months ended June 30, 2026 and 2025, is an income of $1.8 million and an expense of $1.0 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Interest expense $ (48,251) $ (53,023) $ 4,772 (9.0) %

Gain from acquisition related adjustment, net 57,955 — 57,955 N/M

Other expense, net (1)

Other income, net (2)

9,933 23,408 (13,475) (57.6) %

Total other income (expense), net $ 19,637 $ (29,615) $ 49,252 (166.3) %

(1) Other expense, net includes a net loss of $3.4 million during the three months ended March 31, 2026, compared to a net loss of $2.6 million for the same period in 2025, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

(2) Other income, net includes a net gain of $16.0 million during the six months ended June 30, 2026, compared to a net gain of $10.6 million for the same period in 2025, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

In addition, included in other expense, net for the three months ended March 31, 2026 and 2025, is expense of $0.2 million and $0.5 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

In addition, included in other income, net for the six months ended June 30, 2026 and 2025, is an income of $1.6 million and an expense of $1.5 million, respectively, related to changes in the fair value of contingent consideration related to prior acquisitions.

Interest Expense

Three months ended March 31, 2026 compared with March 31, 2025.

During the three months ended March 31, 2026, our average debt balance and interest rate were $1,466.6 million and 6.11%, respectively, compared to $1,443.4 million and 6.57%, respectively, for the same period in 2025.

The decrease in interest expense for the three months ended March 31, 2026 as compared to the same period in 2025 was $1.2 million.

This was primarily driven by the lower interest rates.

Three and six months ended June 30, 2026 compared with June 30, 2025.

During the three months ended June 30, 2026, our average debt balance and weighted average effective interest rate were $1,505.2 million and 6.01%, respectively, compared to $1,542.4 million and 6.75%, respectively, for the same period in 2025.

The decrease in interest expense for the three months ended June 30, 2026 as compared to the same period in 2025 was primarily driven by the lower average debt balance and interest rates.

During the six months ended June 30, 2026, our average debt balance and interest rate were $1,486.0 million and 6.06%, respectively, compared to $1,493.2 million and 6.67%, respectively, for the same period in 2025.

The decrease in interest expense for the six months ended June 30, 2026 as compared to the same period in 2025 was $4.8 million.

This was primarily driven by the lower average debt balance and interest rates.

Our indebtedness is further discussed in Note 6, Debt and Financing Arrangements, to the accompanying unaudited condensed consolidated financial statements.

Gain from acquisition related adjustment, net

Three months ended March 31, 2026 compared with March 31, 2025.

During the three months ended March 31, 2026, our gain from acquisition related adjustment, net was $58.0 million compared to no gain for the same period

Three and six months ended June 30, 2026 compared with June 30, 2025.

During the six months ended June 30, 2026, our gain from acquisition related adjustment, net was $58.0 million, compared to no gain for the

same periods in 2025.

As stated in Note 4, Business Combinations, to the accompanying unaudited condensed consolidated financial statements, the Company recorded a $57.2 million working capital adjustment and related purchase price settlement, which was recognized as a gain within acquisition related adjustments in Total other income (expense), net in the consolidated statements of operations.

Additionally, the Company also recorded another adjustment related to acquisitions of $0.8 million within gains from acquisition related adjustments.

Other Expense, Net

Three months ended March 31, 2026 compared with March 31, 2025.

For the three months ended March 31, 2026, other expense, net includes a net loss of $3.4 million associated with the non-qualified deferred compensation plan.

For the same period in 2025, other expense, net includes a net loss of $2.6 million associated with the non-qualified deferred compensation plan.

Excluding the impact of the deferred compensation plan, the other expense, net for the three months ended March 31, 2026 would have been a loss of $0.6 million, as compared to a gain of $0.6 million during the same period in 2025.

The change was primarily due to a $1.1 million higher loss on sale of assets and a $0.1 million increase of other miscellaneous expense.

Additionally, the Company also recorded an adjustment related to acquisitions of $0.8 million within gains from acquisition related adjustments during the six months ended June 30, 2026.

Other Income, Net

Three and six months ended June 30, 2026 compared with June 30, 2025.

For the three months ended June 30, 2026, Other income, net includes a net gain of $19.4 million associated with the non-qualified deferred compensation plan.

For the same period in 2025, Other income, net includes a net gain of $13.2 million associated with the non-qualified deferred compensation plan.

Excluding the impact of the deferred compensation plan from Other income, net for the three months ended June 30, 2026 would have been an expense of $5.5 million as compared to an income of $12.2 million in the same period in 2025, a decrease of approximately $17.7 million.

The decrease was primarily due to a $7.2 million legal settlement loss recorded in the three months ended June 30, 2026 as compared to a $12.5 million gain from a legal settlement recorded in the same period in 2025.

For the six months ended June 30, 2026, Other income (expense), net includes a net gain of $16.0 million associated with the non-qualified deferred compensation plan.

For the same period in 2025, Other income (expense),net includes a net gain of $10.6 million associated with the non-qualified deferred compensation plan.

Excluding the impact of the deferred compensation plan, the other income, net for the six months ended June 30, 2026 would have been an expense of approximately $6.1 million, as compared to an income of $12.8 million during the same period in 2025, a decrease of approximately $18.9 million.

Income Tax Expense

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Effective tax rate 21.5 % 27.4 %

Three months ended March 31, 2026 compared with March 31, 2025.

The effective tax rate for the three months ended March 31, 2026 was 28.6%, compared to an effective tax rate of 29.0% for the same period in 2025.

The decrease in the effective tax rate is primarily due to a lower effective state tax rate in the current period compared to the same period in 2025 reduced by tax expense in the current period related to stock-based compensation.

The increase in income tax expense of $14.7 million for the three months ended March 31, 2026, when compared to the same period in 2025, was primarily driven by the increase in pre-tax income in 2026.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Income tax expense $ 66,824 $ 65,974 $ 850 1.3 %

Effective tax rate 28.1 % 28.6 %

Three and six months ended June 30, 2026 compared with June 30, 2025.

The effective tax rate for the three months ended June 30, 2026 was 21.5%, compared to 27.4% for the same period in 2025.

The decrease in the effective tax rate is primarily attributed to a tax benefit recognized in the current period related to the purchase of certain transferrable tax credits, partially offset by tax expense related to stock-based compensation.

The decrease in income tax expense of $10.8 million for the three months ended June 30, 2026, when compared to the same period in 2025, was primarily driven by the lower pre-tax income in 2026 and the tax benefit recognized from the purchase of certain transferrable tax credits.

The effective tax rate for the six months ended June 30, 2026 was 28.1%, compared to 28.6% for the same period in 2025.

Income tax expense increased by $0.9 million for the six months ended June 30, 2026, when compared to the same period in 2025, primarily due to higher pre-tax income and tax expense related to stock-

based compensation, partially offset by the tax benefit recognized from the purchase of certain transferrable tax credits.

Operating Practice Groups

During the three months ended March 31, 2026, the National Practice practice group was combined with the Financial Service practice group to better align with internal management and reporting structure.

During the six months ended June 30, 2026, the National Practice practice group was combined with the Financial Service practice group to better align with internal management and reporting structure.

As a result of these changes, we now operate with two reportable segments:

Financial Services and Benefits and Insurances Services.

Financial results of the Financial Service Practice Group for the three months ended March 31, 2025 were adjusted to reflect the change in reportable segments.

Financial results of the Financial Service Practice Group for the three and six months ended June 30, 2025, were adjusted to reflect the change in reportable segments.

A description of these groups' operating results and factors affecting their businesses is provided below.

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Financial Services

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Gross margin / Operating income 80,512 86,628 (6,116) (7.1) %

Total other expense, net (115) (26) (89) N/M

Income before income tax expense $ 80,397 $ 86,602 $ (6,205) (7.2) %

Gross margin percent 13.9 % 14.9 %

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Same-unit $ 1,316,342 $ 1,306,605 $ 9,737 0.7 %

Acquired businesses 4,312 — 4,312 N/M

Total revenue $ 1,320,654 $ 1,306,605 $ 14,049 1.1 %

Operating expenses 1,030,582 1,015,697 14,885 1.5 %

Gross margin / Operating income $ 290,072 $ 290,908 (836) (0.3) %

Total other (expense) income, net

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Gross margin percent 22.0 % 22.3 %

Three months ended March 31, 2026 compared to March 31, 2025.

The Financial Services practice group revenue for the three months ended March 31, 2026 grew by 2.1% to $740.3 million from $725.0 million during the same period in 2025.

Same-unit revenue grew by $13.2 million, or 1.8%, primarily driven by those units that provide advisory services, which increased by approximately $7.3 million, the units that provide traditional accounting and tax-related services, which increased $5.2 million, the units that provide government healthcare compliance business consulting, which increased by approximately $0.5 million, and the units that provide technology services, which increased $0.2 million.

Three months ended June 30, 2026 compared to June 30, 2025.

The Financial Services practice group revenue for the three months ended June 30, 2026 decreased by 0.2% to $580.3 million from $581.6 million during the same period in 2025.

Same-unit revenue declined by $3.4 million, or 0.6%, primarily driven by those units that provide traditional accounting and tax-related services, which decreased $8.0 million and by those units that provide project based advisory services, which decreased by $1.4 million, The decrease was partially offset by the increase in revenue from the units that provide government healthcare compliance business consulting, which increased by approximately $3.5 million, and the units that provide technology services, which increased by $2.4 million.

We provide a range of services to affiliated CPA firms under joint referral and administrative service agreements (“ASAs”).

Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $219.4 million and $234.3 million for the three months ended March 31, 2026 and 2025, respectively.

Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $148.6 million and $164.7 million for the three months ended June 30, 2026 and 2025, respectively.

Operating Expenses

Operating expenses for the three months ended March 31, 2026 increased by $10.0 million, or 1.9%, as compared to the same period in 2025.

Compared to the same period in 2025, facility costs, subscription costs, travel and entertainment costs, technology costs, direct costs, and other discretionary spending to support business growth increased by approximately $4.7 million, $1.9 million, $1.2 million, $1.1 million, $0.9 million, and $0.2 million, respectively.

Operating expenses as a percentage of revenue decreased slightly to 71.7% for the three months ended March 31, 2026 from 71.8% of revenue for the same period in 2025.

Operating expenses for the three months ended June 30, 2026 increased by $4.9 million, or 1.0%, as compared to the same period in 2025.

The increase is primarily due to increases in direct costs and other discretionary spending.

Operating expenses as a percentage of revenue increased slightly to 86.1% for the three months ended June 30, 2026 from 85.1% of revenue for the same period in 2025.

Six months ended June 30, 2026 compared to June 30, 2025.

Revenue for the six months ended June 30, 2026 grew by 1.1% to $1,320.7 million from $1,306.6 million during the same period in 2025.

Same-unit revenue increased by $9.7 million, or 0.7%, This increase was primarily driven by those units that provide advisory services, which increased by $5.9 million, the units that provide technology services, which increased $2.6, and the units that provide government healthcare compliance business consulting, which increased by approximately $4.0 million.

The increase was partially offset by a $2.8 million decrease in traditional accounting and tax services.

Fees earned under the ASAs, as described above, were approximatel y $368.0 million and $398.7 million f or the six months ended June 30, 2026 and 2025, respectively.

Operating Expenses

Operating expenses for the six months ended June 30, 2026 increased by $14.9 million, or 1.5%, as compared to the same period in 2025.

Compared to the same period in 2025, facility costs, subscription costs, travel and entertainment costs, and direct costs increased by approximately $2.7 million, $2.2 million, $1.3 million, and $2.1 million, respectively.

Operating expense as a percentage of revenue was 78.0% and 77.7% during the six months ended June 30, 2026 and 2025, respectively.

Benefits and Insurance Services

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Gross margin percent 15.3 % 17.6 %

Three months ended March 31, 2026 compared to March 31, 2025.

The Benefits and Insurance Services practice group revenue decreased by $4.7 million, or 4.2%, to $108.2 million during the three months ended March 31, 2026 compared to $113.0 million for the same period in 2025.

The decrease was primarily driven by a $1.4 million decrease from human capital related services, a $1.4 million decrease in life insurance services, a $1.3 million decrease in property and casualty services revenue, and a $0.9 million decrease in retirement benefit services lines revenue.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Revenue $ 210,131 $ 214,905 $ (4,774) (2.2) %

Operating expenses 171,529 169,365 2,164 1.3 %

Gross margin / Operating income 38,602 45,540 (6,938) (15.2) %

Total other income, net 435 373 62 16.6 %

Income before income tax expense $ 39,037 $ 45,913 $ (6,876) (15.0) %

Gross margin percent 18.4 % 21.2 %

Three months ended June 30, 2026 compared to June 30, 2025.

The Benefits and Insurance Services practice group revenue growth was relatively flat at $101.9 million during the three months ended June 30, 2026 as compared to $101.9 million for the same period in 2025.

Operating Expenses

Operating expenses for the three months ended June 30, 2026 increased by $2.3 million, or 2.7%, when compared to the same period in 2025.

The increase was not material, and operating expenses within the Benefits and Insurance practice group remained generally consistent period over period.

Operating expenses as a percentage of revenue increased slightly to 84.7% for the quarter ended June 30, 2026 from 82.4% of revenue for the same period in 2025 due to decrease in revenue.

Six months ended June 30, 2026 compared to June 30, 2025.

The Benefits and Insurance Services practice group revenue decreased by $4.8 million, or 2.2%, to $210.1 million during the six months ended June 30, 2026 compared to $214.9 million for the same period in 2025.

The decrease was primarily driven by a $3.4 million decrease in property and casualty services and $1.2 million from human capital related services.

and a $1.8 million decrease in retirement benefit and other services.

These decreases were partially offset by a $1.6 million increase in Employee Benefit Services revenue.

Operating Expenses

Operating expenses for the three months ended March 31, 2026 decreased by $0.1 million, or 0.1%, when compared to the same period in 2025.

The decrease was not material, and operating expenses within the Benefits and Insurance practice group remained generally consistent period over period.

Operating expenses as a percentage of revenue increased to 78.7% for the quarter ended March 31, 2026 from 75.6% of revenue for the same period in 2025.

Operating expenses for the six months ended June 30, 2026 increased by $2.2 million, or 1.3%, when compared to the same period in 2025.

The increase was not material, and operating expenses within the Benefits and Insurance practice group remained generally consistent period over period.

Operating expense as a percentage of revenue increased to 81.6% during the six months ended June 30, 2026 as compared to 78.8% of revenue for the same period in 2025 due to decrease in revenue.

Corporate and Other

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These expenses primarily consist of certain health care costs, gains or losses attributable to assets held in our deferred compensation plan, stock-based compensation, consolidation and integration charges, certain professional fees, certain advertising costs, and other various expenses.

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Operating loss (62,027) (44,275) (17,752) 40.1 %

Total other income (expense), net 30,521 (27,634) 58,155 N/M

Total other expense, net (10,331) (2,514) (7,817) 310.9 %

Loss before income tax expense $ (72,358) $ (46,789) $ (25,569) 54.6 %

Three months ended March 31, 2026 compared to March 31, 2025.

Total operating expenses increased by $2.8 million during the three months ended March 31, 2026, as compared to the same period in 2025.

The non-qualified deferred compensation plan decreased operating expenses by $3.1 million for the three months ended March 31, 2026 and by $2.4 million during the same period in 2025.

Excluding the impact of non-qualified deferred compensation plan, operating expenses increased by $3.4 million during the three months ended March 31, 2026, as compared to the same period in 2025.

The increase was primarily driven by $1.4 million higher technology costs, $1.2 million higher professional service costs, $0.3 million higher depreciation costs, $0.3 million higher travel and entertainment costs, $0.1 million higher marketing costs, and $0.1 million higher facility costs.

Total corporate G&A expenses increased by $1.5 million, or 5.3%, during the three months ended March 31, 2026, as compared to the same period in 2025.

The non-qualified deferred compensation plan decreased corporate G&A expenses by $0.3 million for the three months ended March 31, 2026 and by $0.1 million during the same period in 2025.

Excluding the impact of the non-qualified deferred compensation plan, corporate G&A expense increased by approximately $1.7 million during the three months ended March 31, 2026, as compared to the same period in 2025.

The increase in corporate G&A expenses was primarily due to approximately $1.2 million higher technology costs, $0.4 million higher facility costs, and $0.1 million higher other discretionary spending to support business growth.

The corporate G&A expenses for the three months ended March 31, 2026 and 2025, included approximately $3.1 million and $6.7 million, respectively, of integration costs primarily associated with the Transaction.

Total other income (expense), net increased by $58.2 million during the three months ended March 31, 2026, as compared to the same period in 2025.

For the three months ended March 31, 2026, total other income (expense), net included a net loss of $3.4 million associated with the non-qualified deferred compensation plan.

For the same period in 2025, total other income (expense), net included a net loss of $2.6 million associated with the non-qualified

deferred compensation plan.

Excluding the impact of the non-qualified deferred compensation plan, total other income (expense), net increased by $59.0 million for the three months ended March 31, 2026 as compared to the same period in 2025.

The increase was primarily due to a $57.2 million gain related to the final working capital settlement and other acquisition related adjustments of $0.8 million, as well as $1.0 million lower interest expense.

See Note 3, Business Combinations, to the accompanying unaudited condensed consolidated financial statements in the three months ended March 31, 2026 for further detail.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Operating expenses $ 30,219 $ 20,435 $ 9,784 47.9 %

Corporate general and administrative expenses 79,877 55,707 24,170 43.4 %

Operating loss (110,096) (76,142) (33,954) 44.6 %

Total other income (expense), net 20,190 (30,149) 50,339 (167.0) %

Loss before income tax expense $ (89,906) $ (106,291) $ 16,385 (15.4) %

Three months ended June 30, 2026 compared to June 30, 2025.

Total operating expenses increased by $7.0 million during the three months ended June 30, 2026, as compared to the same period in 2025.

The non-qualified deferred compensation plan increased operating expenses by $17.1 million for the three months ended June 30, 2026 and increased operating expenses by $11.7 million during the same period in 2025.

Excluding the impact of non-qualified deferred compensation plan, Corporate operating expenses increased by $1.6 million during the three months ended June 30, 2026, as compared to the same period in 2025.

The increase was primarily driven by $1.4 million higher technology costs, $0.3 million higher depreciation costs, $0.4 million higher travel and entertainment costs, $0.3 million higher marketing costs, offset by $0.5 million decrease in facility related costs, and $0.3 million other discretionary costs.

Total corporate G&A expenses increased by $10.7 million, or 38.8%, during the three months ended June 30, 2026, as compared to the same period in 2025.

The non-qualified deferred compensation plan increased corporate G&A expenses by $2.3 million for the three months ended June 30, 2026 and increased corporate G&A expenses by $1.5 million during the same period in 2025.

Excluding the impact of the non-qualified deferred compensation plan, corporate G&A expense increased by approximately $9.9 million during the three months ended June 30, 2026, as compared to the same period in 2025.

The G&A expenses for the three months ended June 30, 2026 and 2025 included approximately $4.5 million and $8.1 million of integration costs primarily associated with the Marcum Transaction.

Total other expense, net increased by $7.8 million during the three months ended June 30, 2026, as compared to the same period in 2025.

For the three months ended June 30, 2026, total other expense, net included a net gain of $19.4 million associated with the non-qualified deferred compensation plan.

For the same period in 2025, total other expense, net included a net gain of $13.2 million associated with the non-qualified deferred compensation plan.

Excluding the impact of the non-qualified deferred compensation plan, total other expense, net increased by $14.1 million for the three months ended June 30, 2026 as compared to the same period in 2025.

The increase was primarily due to a $7.2 million estimated legal loss recorded in the three months ended June 30, 2026 as compared to a $12.5 million gain from a legal settlement recorded in the same period in 2025, offset by $3.6 million lower interest expense and $2.0 million favorable adjustment to the fair value of contingent consideration related to prior acquisitions.

Six months ended June 30, 2026 compared to June 30, 2025.

Total operating expenses increased by $9.8 million ,or 47.9%, during the six months ended June 30, 2026, as compared to the same period in 2025.

The deferred compensation plan increased operating expenses by $11.7 million for the six months ended June 30, 2026, and increased operating expense by $9.3 million during the same period in 2025.

Excluding the deferred compensation expenses, operating expense increased by approximately $5.0 million during the six months ended June 30, 2026, as compared to the same period in 2025, primarily driven by higher personnel costs.

Total corporate general and administrative expenses increased by $24.2 million, or 43.4%, during the six months ended June 30, 2026, as compared to the same period in 2025.

The deferred compensation plan increased corporate general and administrative expenses by $2.0 million for the six months ended June 30, 2026 and by $1.3 million during the same period in 2025.

Excluding the deferred compensation expenses, corporate general and administrative expense increased by approximately $23.5 million during the six months ended June 30, 2026, as compared to the same period in 2025.

The increase in G&A expenses was primarily due to approximately $17.2 million of higher personnel costs driven by $10.9 million cumulative impact of the ESPP correction and higher compensation, $2.6 million higher technology costs, $2.0 million higher professional services costs, $0.6 million higher facility costs, and $2.6million higher other discretionary spending to support business growth.

Total other income (expense), net increased by $50.3 million during the six months ended June 30, 2026, as compared to the same period in 2025.

Total other income (expense), net for the six months ended June 30, 2026 includes a net gain of $16.0 million associated with the deferred compensation plan.

For the same period in 2025, total other income (expense), net includes a net gain of $10.6 million associated with the deferred compensation plan.

Excluding the impact of the deferred compensation plan, total other income (expense), net increased by $44.9 million for the six months ended June 30, 2026 compared to the same period in 2025.

The increase in income was primarily attributed to a $58.0 million gain on acquisition related adjustments as well as $4.8 million lower interest expense.

In addition, the other income (expense) included a $7.2 million estimated legal loss recorded in the three months ended June 30, 2026 as compared to a $12.5 million gain from a legal settlement recorded in the same period in 2025.

See Note 4, Business Combinations, to the accompanying unaudited condensed consolidated financial statements in the six months ended June 30, 2026 for further detail.

Our principal sources of liquidity are cash generated from operating activities and financing activities.

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Upon completion of the seasonal accounting and tax services period, cash provided by operations during the remaining three quarters of the fiscal year substantially exceeds the use of cash in the first quarter of the fiscal year.

We also expect to fund the rescission offer relating to the ESPP from either our existing cash balance or funds from our revolving credit facility.

Accounts receivable balances increase in response to the first three months' revenue generated by the Financial Services practice group.

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We provide DSO data because such data is commonly used as a performance measure by analysts and investors and as a measure of our ability to collect on receivables in a timely manner.

Trailing-twelve-month DSO, including the impact of acquisitions, was 99 days and 96 days at March 31, 2026 and 2025, respectively.

Trailing-twelve-month DSO, including the impact of acquisitions, was 89 days and 87 days at June 30, 2026 and 2025, respectively.

DSO at December 31, 2025 was 71 days.

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For additional details, refer to the accompanying Condensed Consolidated Statements of Cash Flows.

Three Months Ended March 31,

Six Months Ended June 30,

(Amounts in thousands)

Net cash used in operating activities (25,515) (88,266)

Net cash provided by operating activities 122,227 24,880

Net cash used in investing activities (21,460) (12,299)

Net cash (used in) provided by financing activities (12,578) 55,363

Net cash used in financing activities (158,315) (33,249)

Net decrease in cash, cash equivalents and restricted cash $ (57,548) $ (20,668)

Operating Activities - Cash used in operating activities was $25.5 million during the three months ended March 31, 2026, primarily consisted of working capital use of $236.9 million, which was offset by net income of $161.6 million and certain non-cash items, such as depreciation and amortization expense of $23.8 million, deferred income tax of $14.7 million, stock-based compensation expense of $7.5 million, bad debt expense of $1.4 million, amortization of deferred financing fees of $1.3 million, and other, net and an adjustment to contingent earnout liability of $1.0 million.

Cash used in operating activities was $88.3 million during the three months ended March 31, 2025, primarily consisted of working capital use of $247.7 million, which was offset by net income of $122.8 million and certain non-cash items, such as depreciation and amortization expense of $24.8 million, deferred income tax of $4.3 million, stock-based compensation expense of $5.6 million, amortization of deferred financing fees of $1.3 million, and an adjustment to contingent earnout liability of $0.5 million.

In addition, as discussed in Note 3, Business Combinations, we received $46.5 million cash as a result of the final working capital adjustment associated with the Transaction during the first quarter of 2026.

Investing Activities - Cash used in investing activities during the three months ended March 31, 2026 was $2.9 million and consisted primarily of $3.5 million used for a business acquisition, $3.0 million in capital expenditures and $0.5 million in net client fund investment activity, partially offset by $3.2 million of other investing activities primarily related to $3.5 million received related to the final working capital adjustment payments under certain notes receivable and $0.3 million from additional earnout proceeds received from previous sales of businesses.

The net cash flow related to funds held for clients and other activities was immaterial.

Cash used in investing activities during the three months ended March 31, 2025 was $5.0 million and consisted primarily of $5.2 million in capital

expenditures, and $0.1 million in other investing activities primarily related to acquisition related working capital adjustment payments and notes receivable.

Operating Activities - Cash provided by operating activities was $122.2 million during the six months ended June 30, 2026, primarily consisted of working capital use of $136.9 million, which was offset by net income of $171.4 million and certain non-cash items, such as depreciation and amortization expense of $47.1 million, deferred income tax of $19.7 million, stock-based compensation expense of $15.6 million, bad debt expense of $3.1 million, amortization of deferred financing fees of $2.7 million, and offset by $0.6 million non-cash income primarily due to favorable fair value adjustments to contingent purchase considerations.

Cash provided by operating activities was $24.9 million during the six months ended June 30, 2025, primarily consisted of working capital use of $225.1 million, which was offset by net income of $164.7 million and certain non-cash items, such as depreciation and amortization expense of $49.9 million, deferred income tax of $17.1 million, stock-based compensation expense of $12.2 million, and an adjustment to contingent earnout liability of $1.5 million.

Investing Activities - Cash used in investing activities during the six months ended June 30, 2026 was $21.5 million and consisted primarily of $14.0 million used for business acquisitions, $11.7 million in capital expenditures and $0.3 million in net client fund investment activity, partially offset by $4.0 million of other investing activities and $6.0 million related to proceeds from the sales and maturities of client fund investments.

The net cash flow related to funds held for clients and other activities was immaterial.

Cash used in investing activities during the six months ended June 30, 2025 was $12.3 million and consisted primarily of $13.1 million in capital expenditures, and $0.5 million in other investing activities primarily related to acquisition related working capital adjustment payments and notes receivable.

The net cash flow related to funds held for clients and other activities were immaterial.

The balances in funds held for clients and client fund obligations can fluctuate with the timing of cash receipts and the related cash payments.

The nature of these accounts is further described in Note 1, Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Financing Activities - Cash used in financing activities during the three months ended March 31, 2026 was $12.6 million and consisted of $29.0 million of cash used in share repurchases, of which $3.5 million was used under the ROFR Agreement and $25.5 million were open market purchases.

Financing Activities - Cash used in financing activities during the six months ended June 30, 2026 was $158.3 million and consisted of $67.5 million of cash used in share repurchases, of which $7.4 million was used under the ROFR Agreement and $60.1 million were open market purchases.

Additionally, $71.4 million was paid to reduce client fund obligations and $18.2 million was paid as contingent consideration payments related to prior acquisitions.

The use of cash was partially offset by $1.1 million in net proceeds from borrowings under the 2024 Credit Facilities.

Cash provided by financing activities during the three months ended March 31, 2025 was $55.4 million and primarily consisted of $127.5 million in net proceeds from borrowings under the 2024 Credit Facilities, partially offset by $7.6 million of cash used in share repurchases for tax withholding purposes, a $35.1 million net decrease in client fund obligations and $29.5 million in contingent consideration payments related to prior acquisitions.

Cash used in financing activities during the six months ended June 30, 2025 was $33.2 million and primarily consisted of $79.1 million of cash used in share repurchases, of which $71.3 million was under the ROFR Agreement, a $57.2 million net decrease in client fund obligations and $48.8 million in contingent consideration payments related to prior acquisitions, which was partially offset by $152.8 million in net proceeds from the credit facility.

CAPITAL RESOURCES

Credit Facilities - At March 31, 2026, we had $1,551.5 million outstanding under the 2024 Credit Facilities as well as $3.2 million of outstanding letters of credit.

Available funds under the 2024 Credit Facilities, based on the terms of the commitment, were approximately $333.4 million at March 31, 2026.

The weighted average interest rate under the 2024 Credit Facilities was 6.11% during the three months ended March 31, 2026, compared to 6.57% for the same period in 2025.

Credit Facilities - At June 30, 2026, we had $1,473.5 million outstanding under the 2024 Credit Facilities as well as $3.2 million of outstanding letters of credit.

Available funds under the 2024 Credit Facilities, based on the terms of the commitment, were approximately $418.3 million at June 30, 2026.

The weighted average interest rate under the 2024 Credit Facilities was 6.06% during the six months ended June 30, 2026, compared to 6.67% for the same period in 2025.

The 2024 Credit Facilities allows for the allocation of funds for future strategic initiatives, including acquisitions and the repurchase of our common stock, subject to the terms and conditions of the 2024 Credit Facilities.

Debt Covenant Compliance - Under the 2024 Credit Facilities, we are required to meet certain financial covenants with respect to (i) total leverage ratio and (ii) minimum interest charge coverage ratio.

We were in compliance with our financial covenants as of March 31, 2026.

We were in compliance with our financial covenants as of June 30, 2026.

Our ability to service our debt and to fund future strategic initiatives will depend upon our ability to generate cash in the future.

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This includes investments in client service delivery and emerging technology that supports revenue growth and improves operational excellence.

Following the completion of the Transaction, our second priority is to pay down debt to have a net leverage ratio of less than 2.5x over time.

As a result of the Transaction and related 2024 Credit Facilities, we have $1,551.5 million of outstanding debt as of March 31, 2026.

Following the completion of the Marcum Transaction, our second priority is to pay down debt to have a net leverage ratio of less than 2.5x over time.

As a result of the Marcum Transaction and related 2024 Credit Facilities, we have $1,473.5 million of outstanding debt as of June 30, 2026.

In addition, we believe that repurchasing shares of our common stock can be prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders.

We will also remain focused on making strategic acquisitions that allow us to strengthen our presence in existing markets, expand into high growth industries, and broaden our services to our clients.

During the three months ended March 31, 2026, we completed one acquisition.

During the three months ended March 31, 2026, we repurchased 0.1 million shares of our common stock at a cost of $3.5 million under the ROFR Agreement and 1.0 million shares of our common stock in the open market for $25.5 million.

During the three months ended March 31, 2025, we made no share repurchases under the ROFR Agreement or in the open market.

To settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares at a cost of $7.7 million during the three months ended March 31, 2025.

During the six months ended June 30, 2026, we completed two acquisition for approximately $14.0 million.

During the six months ended June 30, 2026, we repurchased 0.2 million shares of our common stock at a cost of $7.4 million under the ROFR Agreement and 2.1 million shares of our common stock in the open market for $60.1 million.

During the six months ended June 30, 2025 we repurchased 1.0 million of our common stock for a cost of $71.3 million under the ROFR Agreement and no share repurchases from the open market.

To settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares at a cost of $7.8 million during the six months ended June 30, 2025.

Cash Requirements - Cash requirements for the remainder of 2026 and beyond will include the repayment of outstanding debt and related interest, share repurchases through both our ROFR Agreement and open market purchases, funding seasonal working capital requirements, making contingent purchase price payments for previous acquisitions, income tax payments, and capital expenditures.

We believe that cash provided by operations,

as well as available funds under our 2024 Credit Facilities, will be sufficient to meet cash requirements for the remainder of 2026 and beyond.

We believe that cash provided by operations, as well as available funds under our 2024 Credit Facilities, will be sufficient to meet cash requirements for the remainder of 2026 and beyond.

OFF-BALANCE SHEET ARRANGEMENTS

We maintain administrative service agreements with independent CPA firms (as described more fully under Item 1.

“Business – Financial Services” and in Note 1, Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025), which qualify as variable interest entities.

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

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, 2026 and December 31, 2025, respectively.

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 June 30, 2026 and December 31, 2025, 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 $2.1 million at March 31, 2026 and December 31, 2025, respectively.

The amount of license bonds outstanding was $2.1 million and $2.1 million at June 30, 2026 and December 31, 2025, respectively.

We have various agreements under which we may be obligated to indemnify the other party with respect to certain matters.

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Historically, we have not made any payments under these agreements that have been material individually or in the aggregate.

As of March 31, 2026, we are not aware of any material obligations arising under indemnification agreements that would require payment.

As of June 30, 2026, we are not aware of any material obligations arising under indemnification agreements that would require payment.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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As more information becomes known, these estimates and assumptions could change, which would have an impact on actual results that may differ materially from these estimates and judgments under different assumptions.

We have not made any changes to our critical accounting policies and estimates as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

As disclosed in Note 13, Goodwill, we performed a quantitative assessment of the goodwill associated with our reporting units.

We have not made any changes to our critical accounting policies and estimates as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as amended.

As disclosed in Note 14, Goodwill, during the first quarter of 2026, we performed a quantitative assessment of the goodwill associated with our reporting units.

Based on the results of the quantitative assessment, we concluded that the estimated fair values of our reporting units immediately after the change in reporting units were in excess of their respective carrying values, and as such, goodwill is not impaired.

We have experienced a decline in the Company's market capitalization.

This decline, along with increases in discount rates used in the impairment analysis, reduced the excess of fair value over carrying value of our Financial Accounting Services reporting unit within the Financial Services practice group, which exceeded its carrying value by approximately 7.4%, and of our Property and Casualty reporting unit within our Benefits and Insurance Services practice group, which exceeded its carrying value by approximately 14.5%.

As of March 31, 2026, the carrying value of Financial Accounting Services' goodwill was $1,679.9 million and the carrying value of Property and Casualty's goodwill was $78.8 million.

economic trends, disruptions to our business, adverse changes resulting from new governmental regulations, negative impact on client list due to loss of customers, impact on client list due to declining revenue of existing customers, or divestitures.

During the first quarter of 2026, we experienced a decline in the Company's market capitalization.

This decline, along with increases in discount rates used in the aforementioned quantitative impairment analysis, reduced the excess of fair value over carrying value of our Financial Accounting Services reporting unit within the Financial Services practice group and of our Property and Casualty reporting unit within our Benefits and Insurance Services practice group as of March 31, 2026.

During the second quarter of 2026, the Company's market capitalization improved, and we performed a qualitative assessment of its goodwill and concluded that it was more likely than not the fair values of the Company's reporting units exceeded their respective carrying value, and therefore, goodwill related to the Company's reporting units was determined to not be impaired.

It is possible, depending upon a number of factors that are not determinable at this time or within our control, that the fair values of one or more of our reporting units could decrease in the future and result in an impairment to goodwill, including failure to achieve the anticipated benefits of the Marcum Transaction, significant negative industry or economic trends, disruptions to our business, adverse changes resulting from new governmental regulations, negative impact on client list due to loss of customers, impact on client list due to declining revenue of existing customers, or divestitures.

Additionally, further declines in our market capitalization may trigger the need for future impairment tests where the conclusions may differ and could result in the recognition of an impairment charge.

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This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, our financial position, business strategy, plans and objectives for future performance, are forward-looking statements.

You can identify these statements by the fact that they do not relate strictly to historical or current facts.

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Such risks and uncertainties include, but are not limited to:

that one or more closing conditions to the proposed Merger, including certain regulatory approvals, may not be satisfied or waived, on a timely basis or otherwise, or that the required approval by the shareholders of CBIZ may not be obtained;

the risk that the proposed Merger may not be completed on the terms or in the time frame expected by CBIZ and Parent, or at all;

unexpected costs, charges or expenses resulting from the proposed Merger;

uncertainty of the expected financial performance and results of operations of the combined company following completion of the proposed Merger;

failure to realize the anticipated benefits of the proposed Merger, including as a result of delay in completing

the proposed Merger or integrating the businesses of CBIZ and Parent, on the expected timeframe or at all;

the ability of the combined company to implement its business strategy;

difficulties and delays in the combined company achieving revenue and cost synergies;

inability of the combined company to retain and hire key personnel;

the occurrence of any event that could give rise to termination of the proposed Merger;

the risk that shareholder litigation in connection with the proposed Merger or other litigation, settlements or investigations may affect the timing or completion of the proposed Merger or result in significant costs of defense, indemnification and liability;

evolving legal, regulatory and tax regimes;

changes in general economic, competitive, technological and/or industry-specific conditions affecting the businesses and industries in which CBIZ and Parent operate;

actions by third parties, including government agencies and rating agencies, relating to the proposed Merger;

risks that any debt financing anticipated in connection with the proposed Merger is not obtained or that such financing cannot be obtained on the anticipated timing or terms or unexpected costs or expenses in connection therewith;

risks related to the disruption of management time from ongoing business operations due to the pendency of the proposed Merger, or other effects of the pendency of the proposed Merger on the relationship of any of the parties to the transaction with their employees, customers, partners, or other counterparties;

risks that any announcements relating to the proposed Merger could have adverse effects on the market price of CBIZ’s common stock, credit rating, or operating results, and may have an adverse effect on the ability of CBIZ to retain and hire key personnel, retain customers, and maintain relationships with business partners, suppliers and customers;

the risk that the market price of CBIZ’s common stock may decline if the proposed Merger is not completed;

our ability to maintain effective internal control over financial reporting and disclosure controls and procedures, including ability to remediate our material weaknesses in our internal control over financial reporting;

payments on accounts receivable may be slower than expected, or amounts due on receivables or notes may not be fully collectible;

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given our levels of share-based compensation, our tax rate may vary significantly depending on our stock price;

we may be subject to the actions of activist

stockholders;

rapid technological changes could significantly impact our competitive position, client relationships and operating results and our ability to realize the anticipated benefits of the Transaction;

we may be subject to the actions of activist stockholders;

rapid technological changes could significantly impact our competitive position, client relationships and operating results and our ability to realize the anticipated benefits of the Marcum Transaction;

the widespread outbreak of a communicable illness or any other public health crisis could adversely affect our business, financial condition and results of operations;

we require a significant amount of cash for interest payments on our debt and to expand our business as planned;

terms of the 2024 Credit Facilities could adversely affect our ability to run our business and/or reduce stockholder returns;

terms of the 2024 Credit Facilities could adversely affect our ability to run our business and/or

reduce stockholder returns;

our failure to satisfy covenants in our debt instruments could cause a default under those instruments;

our increased leverage following the Transaction may adversely impact our business;

our increased leverage following the Marcum Transaction may adversely impact our business;

we may be more sensitive to revenue fluctuations than other companies, which could result in fluctuations in the market price of our common stock;

the significant number of shares issuable as the stock consideration in the Transaction may adversely impact our stock price;

the significant number of shares issuable as the stock consideration in the Marcum Transaction may adversely impact our stock price;

the future issuance of additional shares could adversely affect the price of our common stock;

there is volatility in our stock price;

and the price of our common stock could be adversely impacted if we do not perform to expectations following the Transaction.

and there is volatility in our stock price.

Such forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties.

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Business” and “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended.

These are factors that we think could cause our actual results to differ materially from expected and historical results.

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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 2. Management’s Discussion and Analysis