What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-14 · 142 added, 102 removed, 649 unchanged (27% of the section changed)

3 unchanged sentences

(in thousands, except par value and share data)

September 30,

2025 December 31,

5 unchanged sentences

Total current assets 16,330 20,254

Finance receivables, net of allowance for credit losses of $ 8,826 and $ 11,249 as of June 30, 2025 and December 31, 2024, respectively

Finance receivables, net of allowance for credit losses of $ 7,740 and $ 11,249 as of September 30, 2025 and December 31, 2024, respectively

245,396 277,760

22 unchanged sentences

250,000,000 shares authorized;

12,183,906 and 12,213,599 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

12,095,979 and 12,213,599 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 4,417,730 4,419,991

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

6 unchanged sentences

Loss on impairment of intangibles assets 209 — 209 5,771

Loss on disposal of inventory 314 — 314 —

Interest expense 1,179 1,139 3,464 3,514

5 unchanged sentences

Other income (expense), net

Unrealized net gain (loss) on warrants 347 226 ( 77 ) 131

Unrealized net gains on warrants 2,640 47 2,563 178

Net gain on exercise and cancellation of warrants — — — 444

Loss on sale of assets — — ( 82 ) —

Net gain (loss) on marketable investments 37 ( 19 ) ( 68 ) ( 162 )

Gain on sale of business 1,601 — 1,601 —

Net loss on marketable investments ( 246 ) ( 6 ) ( 314 ) ( 168 )

Realized gain on early payment of finance receivable — — 1,729 —

32 unchanged sentences

Balances at June 30, 2025 12,183,906 12 4,418,773 ( 4,172,316 ) 246,469

Stock-based compensation — — 286 — 286

Repurchases of common stock in open market ( 87,927 ) — ( 1,329 ) — ( 1,329 )

Net income — — — 8,780 8,780

Balances at September 30, 2025

12,095,979 $ 12 $ 4,417,730 $ ( 4,163,536 ) $ 254,206

Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity

13 unchanged sentences

Stock options exercised, net 2,595 — — — —

Repurchases of common stock in the open market ( 54,667 ) — ( 950 ) — ( 950 )

Repurchases of common stock in open market ( 54,667 ) — ( 950 ) — ( 950 )

Net income — — — 3,680 3,680

1 unchanged sentence

12,447,195 12 4,423,472 ( 4,140,653 ) 282,831

Stock-based compensation — — 348 — 348

Issuance of common stock 7,123 — — — —

Repurchases of common stock in open market ( 190,336 ) — ( 3,216 ) — ( 3,216 )

Net income — — — 3,468 3,468

Balances at September 30, 2024

12,263,982 $ 12 $ 4,420,604 $ ( 4,137,185 ) $ 283,431

See accompanying notes to the unaudited condensed consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

2 unchanged sentences

Provision (benefit) for credit losses ( 1,635 ) 10,777

Debt issuance costs ( 41 ) —

Loss on sale of assets 82 —

Loss on impairment of intangible assets 209 5,771

2 unchanged sentences

Deferred income taxes, net 4,156 2,100

Unrealized net loss (gain) on warrants 77 ( 131 )

Unrealized net gain on warrants ( 2,563 ) ( 178 )

Loss on disposal of inventory 314 —

Net gain from exercise and cancellation of warrants — ( 444 )

Loss from sale of assets 82 —

Gain on sale of business ( 1,476 ) —

Change in fair value of acquisition-related contingent consideration — ( 4,900 )

14 unchanged sentences

Net cash provided by operating activities 16,987 16,160

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

Nine Months Ended

September 30,

Cash flows from investing activities:

1 unchanged sentence

Settlement of foreign currency forward contract 1,560 —

Proceeds from sale of assets and liabilities held for sale 6,790 —

Sale of marketable investments — 574

9 unchanged sentences

Cash dividends ( 49,078 ) —

Payments of financing costs ( 41 ) ( 50 )

Repurchases of common stock, including fees and expenses ( 3,067 ) ( 5,165 )

4 unchanged sentences

Supplemental non-cash investing and financing activities:

Fair value of warrants received with finance receivables $ — $ 1,073

Cash paid for interest $ 2,259 $ 2,403

8 unchanged sentences

In August 2019, we commenced a complementary strategy of building a pharmaceutical development, manufacturing and intellectual property licensing business.

Our operations comprise two reportable segments:

“Finance Receivables” and “Pharmaceutical Development.” We evaluate and invest in a broad range of healthcare related companies and products with innovative intellectual property, including the biotechnology, medical device, medical diagnostics and related tools, animal health and pharmaceutical industries (collectively, “life sciences”).

We allocate capital to each segment in order to generate income through the sales of life science products by third parties and related earned income sources.

The Company is headquartered in Dallas, Texas, and as of June 30, 2025, the Company had 29 full-time employees.

Our operations were comprise of two reportable segments:

“Finance Receivables” and “Pharmaceutical Development.” As a result of the sale of substantially all assets of the Pharmaceutical Development segment, the Finance Receivables segment will be the only remaining operating segment as of September 30, 2025.

We evaluate and invest in a broad range of healthcare related companies and products with innovative intellectual property, including the biotechnology, medical device, medical diagnostics and related tools, animal health and pharmaceutical industries (collectively, “life sciences”).

We allocate capital within our finance receivables portfolio in order to generate income through the sales of life science products by third parties and related earned income sources.

The Company is headquartered in Dallas, Texas, and as of September 30, 2025, the Company had 9 full-time employees.

The Company has net operating loss carryforwards (“NOLs”) and believes that the ability to utilize these NOLs is an important and substantial asset.

As of August 7, 2025, the Company and its partners have executed transactions with 58 different parties under its specialty finance strategy, funding an aggregate of $ 866.6 million in various financial products across the life science sector.

As of October 31, 2025, the Company and its partners have executed transactions with 58 different parties under its specialty finance strategy, funding an aggregate of $ 871.6 million in various financial products across the life science sector.

The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic royalties paid by companies in the life science sector, and purchased royalties generated by sales of life science products and related intellectual property.

59 unchanged sentences

Intangible Assets

As of June 30, 2025 and December 31, 2024, net book value of intangible assets of $ 0.2 million is included in assets held for sale.

There was no amortization expense related to intangible assets during the three and six months ended June 30, 2025.

Amortization expense related to intangible assets was $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2024.

As of December 31, 2024, net book value of intangible assets of $ 0.2 million is included in assets held for sale.

There was no amortization expense related to intangible assets during the three and nine months ended September 30, 2025.

Amortization expense was $ 0.5 million for the nine months ended September 30, 2024.

Amortization expense for the three months ended September 30, 2024 was immaterial .

Research and Development

19 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

5 unchanged sentences

Diluted net income per share $ 0.72 $ 0.28 $ 1.38 $ 0.61

There were no outstanding options to purchase shares of common stock for the six months ended June 30, 2025.

For the three and six months ended June 30, 2024, outstanding options to purchase shares of common stock in an aggregate of approximately 37,000 and 42,000 , respectively, have been excluded from the calculation of diluted net income per share, as such securities were anti-dilutive.

There were no outstanding options to purchase shares of common stock for the three and nine months ended September 30, 2025.

For the three and nine months ended September 30, 2024, outstanding options to purchase shares of common stock in an aggregate of approximately 160,000 and 161,000 , respectively, have been excluded from the calculation of diluted net income per share, as such securities were anti-dilutive.

Finance Receivables

3 unchanged sentences

The carrying values of finance receivables were as follows (in thousands):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

$ 241,634 $ 224,073

19 unchanged sentences

The funding rate represents management's estimate of the amount of the current unfunded commitment that will be funded over the remaining contractual life of the commitment and is based on historical data.

As of June 30, 2025 and December 31, 2024, the Company had $ 0.3 million and $ 0.1 million, respectively, of liabilities for credit losses on off-balance sheet exposures related to unfunded commitments with these liabilities included in accounts payable and accrued liabilities on the condensed consolidated balance sheets.

As of September 30, 2025 and December 31, 2024, the Company had $ 0.1 million of liabilities for credit losses on off-balance sheet exposures related to unfunded commitments with these liabilities included in accounts payable and accrued liabilities on the condensed consolidated balance sheets.

Please refer to Note 7 for further information on the Company's unfunded commitments.

5 unchanged sentences

The following table details the changes in the allowance for credit losses by Term Loans and Royalties (in thousands):

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

Term Loans Royalties Total Term Loans Royalties Total

Allowance at beginning of period $ 7,158 $ 4,091 $ 11,249 $ 9,731 $ 4,170 $ 13,901

Unfunded Commitments ( 125 ) — ( 125 ) — — —

Provision (benefit) for credit losses ( 1,018 ) ( 567 ) ( 1,585 ) 10,202 575 10,777

11 unchanged sentences

The following table presents nonaccrual and performing finance receivables by portfolio pool, net of allowance for credit losses (in thousands) as of:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Nonaccrual Performing Total Nonaccrual Performing Total

4 unchanged sentences

Total carrying value $ 9,777 $ 235,619 $ 245,396 $ 12,755 $ 265,005 $ 277,760

As of June 30, 2025, the Company had three finance receivables in nonaccrual status:

As of September 30, 2025, the Company had three finance receivables in nonaccrual status:

(1) the Flowonix Medical, Inc.

4 unchanged sentences

(“Ideal”) royalty, with a carrying value of $ 2.5 million.

The Company collected $ 2.2 million and $ 0.7 million on its nonaccrual finance receivables for the six months ended June 30, 2025 and 2024 , respectively .

The Company collected $ 2.5 million and $ 2.6 million on its nonaccrual finance receivables for the nine months ended September 30, 2025 and 2024 , respectively .

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

8 unchanged sentences

The amortized cost basis of the royalty portfolio was $ 37.7 million, inclusive of interest receivables of $ 2.3 million.

As a result of the Transaction, the Company performed a lower-of-cost-or-market analysis in the aggregate resulting in a loss of $ 3.7 million which is included in the "Gain (loss) on revaluation of finance receivables" caption on the Company's unaudited condensed consolidated statements of income for the three and six months ended June 30, 2025.

In conjunction with the closing, the Company's Board of Directors declared a special cash dividend of $ 4.00 per share, payable to all holders of record of the Company’s common stock as of April 24, 2025, with a payment date of May 8, 2025.

During the three months ended June 30, 2024, the Company revalued its royalty for Iluvien as a result of entering into an amendment during the quarter.

Pursuant to the amendment, the forecast of cash flows to be received over the life of the financial royalty was revised resulting in a revaluation gain of $ 2.5 million and corresponding mark-up to the carrying value which is included in the "Gain (loss) on revaluation of finance receivable" caption on our unaudited condensed consolidated statements of income for the three and six months ended June 30, 2024.

Pursuant to the amendment, the forecast of cash flows to be received over the life of the financial royalty was revised resulting in a revaluation gain of $ 2.5 million and corresponding mark-up to the carrying value which is included in the "Gain (loss) on revaluation of finance receivables" caption on the Company's unaudited condensed consolidated statements of income for the nine months ended September 30, 2024.

Credit Quality of Finance Receivables

16 unchanged sentences

The following table summarizes the gross carrying value of Finance Receivables by origination year, grouped by risk rating (in thousands):

June 30, 2025

September 30, 2025

2025 2024 2023 2022 2021 Prior Total

20 unchanged sentences

Total Finance Receivables, gross $ 15,934 $ 73,011 $ 66,584 $ 46,107 $ 27,351 $ 60,022 $ 289,009

Assets and Liabilities Held For Sale

Acquisitions and Dispositions

MOD3 Exclusive Option and Asset Purchase Agreement

With an effective date of January 1, 2024, the Company entered into an Option and Asset Purchase Agreement (the "Option Agreement") with Aptar on March 14, 2024, which granted Aptar an exclusive option to acquire certain of MOD3 assets related to its business of providing CDMO services to third parties, subject to certain exclusions.

Aptar must exercise the Option by or before January 1, 2026.

In exchange for the exclusive purchase option the partner is to provide consideration in the form of an "option fee" and "guaranteed revenue payments."

The option fee is broken into two components:

With an effective date of January 1, 2024, the Company entered into an Option and Asset Purchase Agreement (the "Option Agreement") with Aptar on March 14, 2024, which granted Aptar an exclusive option to acquire certain of MOD3 assets related to its business of providing contract development and manufacturing organizations ("CDMO") services to third parties, subject to certain exclusions.

Aptar was required to exercise the Option by or before January 1, 2026.

In exchange for the exclusive purchase option the partner provided consideration in the form of an "option fee" and "guaranteed revenue payments."

The option fee was broken into two components:

A low-single digit million fee due within 30 business days of executing the agreement;

1 unchanged sentence

The first option fee was paid in April 2024 and the second option fee was paid in February 2025.

Option fee payments will be included in deferred income until the earlier of term expiration or exercise of the purchase option.

Should the partner exercise the purchase option, any option fee payments made will be applied towards the purchase price.

The guaranteed revenue payments include two components:

Option fee payments were included in deferred income until the earlier of term expiration or exercise of the purchase option.

Upon the exercise of the purchase option, the option fee payments were applied towards the purchase price.

The guaranteed revenue payments included two components:

A mid-single digit million guaranteed revenue payment in 2024 and a mid-single digit million guaranteed revenue payment in 2025.

The revenue is to be derived by the partner under an existing collaboration agreement, and the partner is to pay the difference should the minimum amount not be met each year.

The revenue was to be derived by the partner under an existing collaboration agreement, and the partner was to pay the difference should the minimum amount not be met each year.

Each year's guaranteed revenue amount is to be paid in two installments semi-annually each year.

Should revenue exceed the 2024 or 2025 guaranteed revenue amounts after receiving a difference payment in the first half of the year, we must repay the partner the amount of such overpayment.

There was $ 0.2 million guaranteed revenue recognized during the three and six months ended June 30, 2025 and $ 0.4 million guaranteed revenue recognized during the three and six months ended June 30, 2024 .

Should revenue exceed the 2024 or 2025 guaranteed revenue amounts after receiving a difference payment in the first half of the year, we would be required to repay the partner the amount of such overpayment.

There was $ 0.2 million guaranteed revenue recognized during the three and nine months ended September 30, 2025 and $ 0.4 million guaranteed revenue recognized during the three and nine months ended September 30, 2024 .

As a result of the option being exercised the guaranteed revenue agreement was terminated.

On July 15, 2025, the Company, MOD3, and Aptar closed the asset purchase agreement (the "Purchase Agreement") for the sale and assignment of the assets to Aptar (the "sale of business") for an aggregate purchase price of approximately $ 6.9 million which includes cash previously paid by Aptar in accordance with the Option Agreement.

For the three and nine months ended September 30, 2025, the Company recognized a net gain on sale of $ 1.6 million for the completion of the sale, which was inclusive of $ 3.3 million in option fees recognized as a component of the gain on sale.

The gain was recognized in the "gain on sale of business" line item in our Condensed Consolidated income statement for three and nine months ended September 30, 2025.

As a result of the option being exercised, Aptar's obligation to continue making guaranteed payments for the period following the closing of the sale of business was terminated.

As the Company expected Aptar to exercise the Option within 12 months from December 31, 2024, certain assets and liabilities of the MOD3 business were classified as held for sale as of December 31, 2024.

The assets and liabilities held for sale as of June 30, 2025, represent the major operating assets and liabilities of the MOD3 business (i.e.

the majority of the Pharmaceutical Development segment) and as such, when the Option is exercised, this segment of the business will no longer exist and only the specialty finance business will remain.

The decision to enter into the Option and Asset Purchase Agreement was made to align with the overall strategy to focus on the specialty finance business.

The assets and liabilities held for sale as of December 31, 2024, represent the major operating assets and liabilities of the MOD3 business (i.e.

the majority of the Pharmaceutical Development segment).

The decisions to enter into the Option Agreement and the Purchase Agreement were made to align with the overall strategy to focus on the specialty finance business.

In conjunction with the completion of the sale of MOD3 effective July 15, 2025, the Pharmaceutical Development segment will no longer exist and only the specialty Finance Receivable segment will remain for reporting periods beginning after September 30,2025.

The following table summarizes the assets and liabilities held for sale:

June 30, 2025 December 31, 2024

December 31, 2024

Inventory $ 354

6 unchanged sentences

Total liabilities held for sale $ 1,255

During neither the six months ended June 30, 2025 nor the year ended December 31, 2024, there was not a strategic shift for the Company, and accordingly, the Pharmaceutical Development segment does not meet the criteria to be classified as a discontinued

As a result, we will continue to report our operational results for the Pharmaceutical Development segment until the sale.

During the nine months ended September 30, 2025 and the year ended December 31, 2024, there was not a strategic shift for the Company, and accordingly, the Pharmaceutical Development segment does not meet the criteria to be classified as a discontinued operation.

As a result, we will continue to report our operational results for the Pharmaceutical Development segment.

The following table shows the net loss before taxes for MOD3 (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Net loss before taxes $ 18 $ ( 1,736 ) $ ( 518 ) $ ( 3,192 )

On July 15, 2025, the Company, MOD3, and Aptar closed the asset purchase agreement (the "Purchase Agreement") for the sale and assignment of the Assets to Aptar (the "Asset Sale") for an aggregate purchase price of approximately $ 6.9 million which includes cash previously paid by Aptar in accordance with the Option Agreement.

Net income (loss) before taxes $ 660 $ ( 892 ) $ 144 $ ( 4,084 )

Agreement and Plan of Merger

On October 9, 2025, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Runway Growth Finance Corp., a Maryland corporation (“Parent”), RWAY Portfolio Holding Corp., a Delaware corporation and a direct wholly owned subsidiary of Parent (“Intermediary Sub”), RWAY Portfolio Corp., a Delaware corporation and a direct wholly owned subsidiary of Intermediary Sub (“Acquisition Sub”), and Runway Growth Capital LLC, a Delaware limited liability company (“Parent External Adviser”).

Marketable Investments

Investments in corporate debt and equity securities consist of the following (in thousands):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Corporate debt securities $ — $ 21

3 unchanged sentences

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

June 30, 2025 $ 6 $ — $ — $ 6

December 31, 2024 $ 21 $ — $ — $ 21

5 unchanged sentences

The following table presents gains and losses on equity securities as prescribed by ASC 321, Investments - Equity Securities (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

16 unchanged sentences

On August 29, 2024, the Company entered into an amendment to the Credit Agreement pursuant to which the consolidated interest coverage ratio of Borrower will not be less than 2.00 to 1:00, the net charge-off percentage in relation to Borrower's portfolio of loan assets will not be less than 8 % for such calendar month, and cumulative share repurchases will not exceed $ 7.0 million in value in any 12-month period.

As of June 30, 2025 and December 31, 2024, there was $ 0.3 million and $ 6.2 million outstanding under the Credit Agreement, respectively.

During the three and six months ended June 30, 2025, the Company recognized $ 0.2 million and $ 0.5 million, respectively, of interest expense in connection with the Credit Agreement.

During the three and six months ended June 30, 2024, the Company recognized $ 0.2 million and $ 0.6 million, respectively, of interest expense in connection with the Credit Agreement.

As of September 30, 2025 there was no outstanding balance under the Credit agreement and $ 6.2 million outstanding as of December 31, 2024.

During the three and nine months ended September 30, 2025, the Company recognized $ 0.3 million and $ 0.7 million, respectively, of interest expense in connection with the Credit Agreement.

During the three and nine months ended September 30, 2024, the Company recognized $ 0.2 million and $ 0.8 million, respectively, of interest expense in connection with the Credit Agreement.

Senior Notes Due 2027

6 unchanged sentences

The following table summarizes the outstanding balance of the Notes, net of debt issuance costs (in thousands):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

2027 Senior Notes $ 32,969 $ 32,969

2 unchanged sentences

The Company’s future principal obligations for the Notes were as follows (in thousands):

June 30, 2025

September 30, 2025

Remainder of 2025 $ —

3 unchanged sentences

On and after any redemption date, interest will cease to accrue on the redeemed Notes.

Additionally, upon the occurrence of a Triggering Event (as defined in the Indenture), holders of the Notes will have the right to require the Company to make an offer to repurchase all or any portion of their Notes for cash at a purchase price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.

Additionally, upon the occurrence of a Triggering Event (as defined in the Indenture), holders of the Notes will have the right to

require the Company to make an offer to repurchase all or any portion of their Notes for cash at a purchase price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.

The Notes are senior unsecured obligations of the Company and rank equal in right of payment with the Company’s existing and future senior unsecured indebtedness.

During the three and six months ended June 30, 2025, the Company recognized $ 0.9 million and $ 1.8 million, respectively, of interest expense in connection with the Notes.

During the three and six months ended June 30, 2024, the Company recognized $ 0.9 million and $ 1.8 million, respectively, of interest expense in connection with the Notes.

During the three and nine months ended September 30, 2025, the Company recognized $ 0.9 million and $ 2.7 million, respectively, of interest expense in connection with the Notes.

During the three and nine months ended September 30, 2024, the Company recognized $ 0.9 million and $ 2.7 million, respectively, of interest expense in connection with the Notes.

The Company evaluated the 2027 Senior Notes for derivatives pursuant to Accounting Standard Codification ("ASC") 815, "Derivatives and Hedging," and identified an embedded derivative that required bifurcation as the feature is not clearly and closely related to the host instrument.

1 unchanged sentence

The Company reassesses the feature quarterly to determine if it requires separate accounting.

There have been no changes to the Company’s assessment that the fair value of the embedded derivative is immaterial through June 30, 2025.

There have been no changes to the Company’s assessment that the fair value of the embedded derivative is immaterial through September 30, 2025.

Commitments and Contingencies

5 unchanged sentences

The Company’s corporate office space in Dallas, Texas totals approximately 4,450 square feet.

The MOD3 headquarters is located in Boonton, New Jersey, where MOD3 leases approximately 32,000 square feet of space.

The office lease expires in December 2029 with an option to renew for an additional five years .

The components of lease cost were as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

2 unchanged sentences

Total lease cost $ 66 $ 125 $ 310 $ 415

Future minimum rent on the Company's operating leases was as follows as of June 30, 2025 (in thousands):

Future minimum rent on the Company's operating leases was as follows as of September 30, 2025 (in thousands):

Remainder of 2025 $ 45

Total future lease payments $ 544

As of June 30, 2025, total future lease payments exclude $ 1.2 million of lease payments related to held for sale leases, of which $ 0.1 million are due in the remainder of 2025.

Contingent Consideration

3 unchanged sentences

Accordingly, the Company concluded that the liability for contingent consideration, previously held at its estimated fair value of $ 4.9 million, should be $ 0 .

The write-off of this contingent consideration liability resulted in a gain of $ 4.9 million during the three and six months ended June 30, 2024, and is included in the "Change in fair value of acquisition-related contingent consideration" caption of our unaudited condensed consolidated statements of income.

The write-off of this contingent consideration liability resulted in a gain of $ 4.9 million during the nine months ended September 30, 2024, and is included in the "Change in fair value of acquisition-related contingent consideration" caption of the Company's unaudited condensed consolidated statements of income.

Unfunded Commitments

Per the terms of the royalty purchase or credit agreements, unfunded commitments are contingent upon reaching an established revenue threshold or other performance metrics on or before a specified date or period of time, and in the case of loan transactions, are subject to being advanced as long as an event of default does not exist.

As of June 30, 2025, the Company had $ 7.5 million of unfunded commitments.

As of September 30, 2025, the Company had $ 2.5 million of unfunded commitments.

The Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course of its business.

1 unchanged sentence

The Company cannot predict the timing or outcome of these claims and other proceedings.

As of June 30, 2025, the Company is not involved in any arbitration and/or other legal proceeding that it expects to have a material effect on its business, financial condition, results of operations and cash flows.

As of September 30, 2025, the Company is not involved in any arbitration and/or other legal proceeding that it expects to have a material effect on its business, financial condition, results of operations and cash flows.

Indemnification

4 unchanged sentences

As a result of the Company’s insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is insignificant.

Accordingly, the Company had no liabilities recorded for these agreements as of June 30, 2025 and December 31, 2024.

Accordingly, the Company had no liabilities recorded for these agreements as of September 30, 2025 and December 31, 2024.

Fair Value Measurements

12 unchanged sentences

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred.

There were no transfers between any levels for recurring fair value measurements during the three and six months ended June 30, 2025 and 2024.

There were no transfers between any levels for recurring fair value measurements during the three and nine months ended September 30, 2025 and 2024.

The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying consolidated financial statements and the related market or fair value.

24 unchanged sentences

The foreign currency forward contract was recorded in other non-current assets in the condensed consolidated balance sheet as of December 31, 2024 and totaled $ 2.5 million.

Prior to the termination of the foreign currency forward contract the Company recognized losses of $ 0.5 million and $ 0.9 million for the three and six months ended June 30, 2025, respectively, due to changes in fair value related to its foreign currency forward contract.

During the three and six months ended June 30, 2024, the Company recognized gains of $ 0.8 million and $ 1.7 million, respectively, due to changes in fair value related to its foreign currency forward contract.

The following table presents financial assets measured at fair value on a recurring basis as of June 30, 2025 (in thousands):

Prior to the termination of the foreign currency forward contract the Company recognized a loss of $ 0.9 million for the nine months ended September 30, 2025 due to changes in fair value related to its foreign currency forward contract.

During the three and nine months ended September 30, 2024, the Company recognized a loss of $ 1.0 million and a gain of $ 0.6 million, respectively, due to changes in fair value related to its foreign currency forward contract.

The following table presents financial assets measured at fair value on a recurring basis as of September 30, 2025 (in thousands):

Sheets Quoted Prices

15 unchanged sentences

The changes in fair value of the warrant assets during were as follows (in thousands):

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

Fair value - December 31, 2024 $ 4,366 Fair value - December 31, 2023

3 unchanged sentences

Gain on foreign currency transactions 172 Loss on foreign currency transactions 2

Fair value - June 30, 2025

$ 4,612 Fair value - June 30, 2024

Fair value - September 30, 2025

$ 7,599 Fair value - September 30, 2024

The Company holds warrants issued to the Company in conjunction with certain term loan investments.

2 unchanged sentences

The following ranges of assumptions were used in the models to determine fair value:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Dividend rate range — —

5 unchanged sentences

The warrant assets are valued using a market approach and include significant unobservable inputs such as risk-free rate, expected life, and expected volatility.

As of June 30, 2025 the risk-free rate range weighted average was 4.0 %, and had a median of 3.8 %.

As of September 30, 2025 the risk-free rate range weighted average was 3.7 %, and had a median of 3.7 %.

As of December 31, 2024, the risk-free rate range weighted average was 4.4 %, and had a median of 4.4 %.

As of June 30, 2025 the expected life range weighted average was 5.5 years, and had a median of 4.1 years.

As of September 30, 2025 the expected life range weighted average was 5.2 years, and had a median of 4.5 years.

As of December 31, 2024 the expected life range weighted average was 5.8 years, and had a median of 4.3 years.

As of June 30, 2025 the expected volatility range weighted average was 70 %, and had a median of 87.0 %.

As of September 30, 2025 the expected volatility range weighted average was 70.1 %, and had a median of 87.6 %.

As of December 31, 2024 the expected volatility range weighted average was 65.6 %, and had a median of 104.3 %.

As of June 30, 2025 and December 31, 2024, the Company had three royalties, Best, Ideal, and Flowonix that were deemed to be impaired based on reductions in carrying value.

During the three and six months ended June 30, 2025, the Company recognized impairment based on a reduction in carrying value of two royalties, Flowonix and Ideal.

As of September 30, 2025 and December 31, 2024, the Company had three royalties, Best, Ideal, and Flowonix that were deemed to be impaired based on reductions in carrying value.

During three months ended September 30, 2025 the Company recognized an impairment reduction in carrying value of one royalty, Ideal.

During the nine months ended September 30, 2025, the Company recognized impairment based on a reduction in carrying value of two royalties, Flowonix and Ideal.

As of December 31, 2024, the Company had one loan, BIOLASE, that was deemed to be impaired based on reduction in carrying value in prior periods.

The following table presents the royalties and the loan measured at amortized cost using the effective interest method, which approximates fair value, on a nonrecurring basis as of June 30, 2025 and December 31, 2024 (in thousands):

The following table presents the royalties and the loan measured at amortized cost using the effective interest method, which approximates fair value, on a nonrecurring basis as of September 30, 2025 and December 31, 2024 (in thousands):

Sheets Quoted Prices

2 unchanged sentences

(Level 2) Significant

June 30, 2025

September 30, 2025

$ 11,502 $ — $ — $ 11,502

1 unchanged sentence

$ 14,830 $ — $ — $ 14,830

There were no liabilities measured at fair value on a nonrecurring basis as of June 30, 2025 and December 31, 2024.

There were no liabilities measured at fair value on a nonrecurring basis as of September 30, 2025 and December 31, 2024.

The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value.

The disclosures include financial instruments and derivative financial instruments measured at fair value on a recurring and non-recurring basis.

The following table presents the fair value of financial assets as of June 30, 2025 (in thousands):

The following table presents the fair value of financial assets as of September 30, 2025 (in thousands):

Carrying Value Fair Value Level 1 Level 2 Level 3

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

5 unchanged sentences

The Company’s contract liabilities are presented as deferred income and are included in accounts payable and accrued liabilities in the consolidated balance sheets (in thousands):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Pharmaceutical Development Segment

1 unchanged sentence

Income recognized (1)

( 3,300 ) ( 9 )

Additions to deferred income 1,800 1,500

Ending balance $ — $ 1,500

(1) Included as a component on the gain of sale of MOD3 assets

Segment Information

9 unchanged sentences

The following tables present financial information for the Company's reportable segments for the periods indicated (in thousands):

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Finance Receivables Pharmaceutical Development and Other Holding Company and Other Consolidated

1 unchanged sentence

Other revenue 60 — — 60

Provision for credit losses 761 — — 761

Benefit from credit losses ( 931 ) — — ( 931 )

Loss on impairment of intangible assets — 209 — 209

Interest expense 240 13 926 1,179

Pharmaceutical manufacturing, research and development expense — 147 — 147

Loss on disposal of inventory — 314 — 314

Depreciation and amortization expense — — 2 2

General and administrative expense 110 258 2,918 3,286

Other expense, net ( 67 ) — — ( 67 )

Other income expense, net 2,419 1,601 — 4,020

Income tax expense — — 1,916 1,916

Net income (loss) 13,882 660 ( 5,762 ) 8,780

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Finance Receivables Pharmaceutical Development and Other Holding Company and Other Consolidated

2 unchanged sentences

Provision for credit losses 1,385 — — 1,385

Loss on impairment of intangible assets — 5,771 — 5,771

Interest expense 230 2 907 1,139

Pharmaceutical manufacturing, research and development expense — 585 — 585

Change in fair value of acquisition-related contingent consideration — ( 4,900 ) — ( 4,900 )

Depreciation and amortization expense — 214 20 234

3 unchanged sentences

Net income (loss) 8,379 ( 892 ) ( 4,019 ) 3,468

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Finance Receivables Pharmaceutical Development and Other Holding Company and Other Consolidated

2 unchanged sentences

Benefit from credit losses ( 1,635 ) — — ( 1,635 )

Loss on impairment of intangible assets — 209 — 209

Interest expense 713 18 2,733 3,464

Pharmaceutical manufacturing, research and development — 1,550 — 1,550

Loss on disposal of inventory — 314 — 314

Depreciation and amortization expense — — 40 40

General and administrative expense 236 1,553 7,617 9,406

Other expense, net ( 2,281 ) ( 82 ) — ( 2,363 )

Other income (expense), net 138 1,519 — 1,657

Income tax expense — — 4,220 4,220

Net income (loss) 31,321 144 ( 14,610 ) 16,855

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Finance Receivables Pharmaceutical Development and Other Holding Company and Other Consolidated

11 unchanged sentences

Net income (loss) 23,195 ( 4,084 ) ( 11,495 ) 7,616

Included in Holding Company and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs, including public company costs and non-MOD3 corporate employees, which have been included for purposes of reconciling to the consolidated amounts.

Included in Holding Company and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs, including public company costs and corporate employees, which have been included for purposes of reconciling to the consolidated amounts.

The following table presents total assets for the Company's reportable segments for the periods indicated (in thousands):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Finance receivables $ 266,580 $ 299,248

3 unchanged sentences

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