What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-07 compared with 2025-05-01 · 174 added, 93 removed, 403 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except share data)

Three Months Ended March 31,

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

2025 2024 2025 2024

Revenue $ 353,557 $ 314,800 $ 695,532 $ 620,921

7 unchanged sentences

Technology and development (1)

8,586 8,190 16,658 15,150

General and administrative (1)

5 unchanged sentences

Loss from investment in joint venture — ( 47 ) ( 305 ) ( 150 )

Operating loss ( 1,473 ) ( 6,137 )

Operating income (loss) 2,314 ( 5,471 ) 841 ( 11,608 )

Interest expense 3,682 3,655 6,893 7,251

Other (income), net ( 11,914 ) ( 3,220 ) ( 15,154 ) ( 6,063 )

Loss before income taxes ( 1,444 ) ( 6,890 )

Income (loss) before income taxes 10,546 ( 5,906 ) 9,102 ( 12,796 )

Income tax (benefit) expense 1,133 ( 44 ) 1,172 ( 82 )

Net loss $ ( 1,483 ) $ ( 6,852 )

Net loss per share:

Basic and diluted $ ( 0.03 ) $ ( 0.16 )

Net income (loss) $ 9,413 $ ( 5,862 ) $ 7,930 $ ( 12,714 )

Net income (loss) per share:

Basic $ 0.22 $ ( 0.14 ) $ 0.19 $ ( 0.30 )

Diluted $ 0.22 $ ( 0.14 ) $ 0.18 $ ( 0.30 )

Weighted average shares of common stock outstanding:

Basic and diluted 42,775,955 41,917,094

Basic 42,872,153 42,078,271 42,734,426 41,997,683

Diluted 43,325,704 42,078,271 43,544,325 41,997,683

(1) Includes stock-based compensation expense as follows:

8 unchanged sentences

(in thousands)

Three Months Ended March 31,

Net loss $ ( 1,483 ) $ ( 6,852 )

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

2025 2024 2025 2024

Net income (loss) $ 9,413 $ ( 5,862 ) $ 7,930 $ ( 12,714 )

Other comprehensive income (loss):

7 unchanged sentences

(in thousands, except share data)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Assets (unaudited)

2 unchanged sentences

Short-term investments 196,854 147,089

Accounts and other receivables, net of allowance for credit losses of $ 1,046 at March 31, 2025 and $ 1,117 at December 31, 2024

Accounts and other receivables, net of allowance for credit losses of $ 1,357 at June 30, 2025 and $ 1,117 at December 31, 2024

292,820 274,031

23 unchanged sentences

$ 0.00001 par value per share, 100,000,000 shares authorized;

43,804,141 and 42,775,955 issued and outstanding at March 31, 2025;

44,015,958 and 42,987,772 issued and outstanding at June 30, 2025;

43,516,631 and 42,488,445 shares issued and outstanding at December 31, 2024

6 unchanged sentences

Treasury stock, at cost:

1,028,186 shares at March 31, 2025 and December 31, 2024

1,028,186 shares at June 30, 2025 and December 31, 2024

( 16,534 ) ( 16,534 )

5 unchanged sentences

(in thousands, except share amounts)

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Treasury Stock Total Stockholders' Equity

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Treasury Stock Total Stockholders' Equity

Shares Amount

Balance at January 1, 2025 42,488,445 $ — $ 568,302 $ ( 2,612 ) $ ( 225,888 ) $ ( 16,534 ) $ 323,268

Balance at April 1, 2025 42,775,955 $ — $ 578,293 $ ( 715 ) $ ( 227,371 ) $ ( 16,534 ) $ 333,673

Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings 211,817 — ( 469 ) — — — ( 469 )

1 unchanged sentence

Other comprehensive income — — — 3,372 — — 3,372

Net Income — — — — 9,413 — 9,413

Balance at June 30, 2025 42,987,772 $ — $ 587,289 $ 2,657 $ ( 217,958 ) $ ( 16,534 ) $ 355,454

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Treasury Stock Total Stockholders' Equity

Shares Amount

Balance at April 1, 2024 42,004,619 $ — $ 544,593 $ ( 1,581 ) $ ( 223,107 ) $ ( 16,534 ) $ 303,371

Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings 155,012 — ( 243 ) — — — ( 243 )

Stock-based compensation expense — — 8,772 — — — 8,772

Other comprehensive loss — — — ( 190 ) — — ( 190 )

Net loss — — — — ( 5,862 ) — ( 5,862 )

Balance at March 31, 2025 42,775,955 $ — $ 578,293 $ ( 715 ) $ ( 227,371 ) $ ( 16,534 ) $ 333,673

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Treasury Stock Total Stockholders' Equity

Balance at June 30, 2024 42,159,631 $ — $ 553,122 $ ( 1,771 ) $ ( 228,969 ) $ ( 16,534 ) $ 305,848

See accompanying notes to the condensed consolidated financial statements.

Trupanion, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts)

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Treasury Stock Total Stockholders' Equity

Shares Amount

2 unchanged sentences

Stock-based compensation expense — — 19,344 — — — 19,344

Other comprehensive income — — — 5,269 — — 5,269

Net Income — — — — 7,930 — 7,930

Balance at June 30, 2025 42,987,772 $ — $ 587,289 $ 2,657 $ ( 217,958 ) $ ( 16,534 ) $ 355,454

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Treasury Stock Total Stockholders' Equity

Shares Amount

Balance at January 1, 2024 41,858,866 $ — $ 536,108 $ 403 $ ( 216,255 ) $ ( 16,534 ) $ 303,722

Issuance of common stock in connection with the Company's equity award programs, net of tax withholdings 300,765 — ( 116 ) — — — ( 116 )

Stock-based compensation expense — — 17,130 — — — 17,130

Other comprehensive loss — — — ( 2,174 ) — — ( 2,174 )

Net loss — — — — ( 12,714 ) — ( 12,714 )

Balance at March 31, 2024 42,004,619 $ — $ 544,593 $ ( 1,581 ) $ ( 223,107 ) $ ( 16,534 ) $ 303,371

Balance at June 30, 2024 42,159,631 $ — $ 553,122 $ ( 1,771 ) $ ( 228,969 ) $ ( 16,534 ) $ 305,848

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

Net loss $ ( 1,483 ) $ ( 6,852 )

Adjustments to reconcile net loss to cash provided by (used in) operating activities:

Net income (loss) $ 7,930 $ ( 12,714 )

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization 7,753 8,161

Stock-based compensation expense 19,286 16,798

Realized gain on nonmonetary exchange of preferred stock investment ( 7,783 ) —

Other, net 951 ( 318 )

25 unchanged sentences

Purchases of property, equipment, and internal-use software included in accounts payable and accrued liabilities $ 296 $ 552

Purchase of intellectual property in exchange for preferred stock investment $ 14,783 $ —

See accompanying notes to the condensed consolidated financial statements.

11 unchanged sentences

Securities and Exchange Commission ("SEC") on February 27, 2025 ("the 2024 10-K").

The Company's accounting policies are described in Note 1 to the audited financial statements included in the 2024 10-K.

Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the full fiscal year or any other interim period.

The Company's accounting policies are described in Note 1 to the audited financial statements included in the 2024 10-K and, for incremental accounting topics in the current period, are described below.

Operating results for the six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the full fiscal year or any other interim period.

Use of Estimates

2 unchanged sentences

See Note 1 to the audited financial statements included in the 2024 10-K for additional discussion of these estimates and assumptions.

Acquisition of Intellectual Property

The Company’s intellectual property acquisition was determined to be an asset acquisition in accordance with ASC 805-50, Business Combinations.

To conclude if a transaction is an asset acquisition, the Company considers if substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or group of similar identifiable assets.

The Company then considers if the acquired set of assets consist of inputs and processes that contribute to the creation of outputs.

The acquired assets are recognized based on their cost to the Company, which includes related transaction costs.

The Company allocates the purchase price based on relative fair value of the assets acquired.

Refer to Note 4 for further discussion on the Company's acquisition of intellectual property.

Nonmonetary Exchange

The Company accounts for nonmonetary exchanges at fair value.

If the transaction lacks commercial substance or fair value is not determinable, the asset received is recorded at the carrying amount of the asset surrendered.

The Company evaluates each transaction individually to determine the appropriate accounting treatment.

Accumulated Other Comprehensive Income Reclassifications

The Company’s available-for-sale securities are reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss).

Upon realization, through sale or maturity, realized gains and losses are reclassified out of accumulated other comprehensive income.

The Company has made a policy election to report the reclassification of accumulated other comprehensive income (loss), net from the beginning to the end of the period within our Statement of Comprehensive Income (Loss) and Note 11, Accumulated Comprehensive Income (Loss).

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, which improves and expands upon annual income tax disclosures, primarily relating to rate reconciliation and income taxes paid information.

The ASU is effective for the Company for the fiscal year ending December 31, 2025.

The ASU is effective for the Company for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of adopting ASU 2023-09.

In November 2024, the FASB issued ASU 2024-03, which requires public business entities disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods.

In November 2024, the FASB issued ASU 2024-03, which requires public business entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods.

The ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is still evaluating the impact of this ASU on its consolidated financial statements.

Net Loss per Share

Basic net loss per share is computed using the weighted average number of shares of common stock outstanding during the period.

Diluted net loss per share is calculated using the weighted average number of shares of common stock plus, when dilutive, potential shares of common stock outstanding using the treasury-stock method.

Net Income (Loss) per Share

Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period.

Diluted net income (loss) per share is calculated using the weighted average number of shares of common stock plus, when dilutive, potential shares of common stock outstanding using the treasury-stock method.

Potential shares of common stock outstanding include stock options, and unvested restricted stock units.

The components of basic and diluted earnings per share were as follows (in thousands, except share and per share information):

Three Months Ended June 30, Six Months Ended June 30, 2025

2025 2024 2025 2024

Basic earnings per share:

Net income (loss) $ 9,413 $ ( 5,862 ) $ 7,930 $ ( 12,714 )

Shares used in computation:

Weighted average shares of common stock outstanding 42,872,153 42,078,271 42,734,426 41,997,683

Basic earnings per share $ 0.22 $ ( 0.14 ) $ 0.19 $ ( 0.30 )

Diluted earnings per share:

Net income (loss) $ 9,413 $ ( 5,862 ) $ 7,930 $ ( 12,714 )

Shares used in computation:

Weighted average shares of common stock outstanding 42,872,153 42,078,271 42,734,426 41,997,683

Stock options 174,262 — 312,622 —

Restricted stock awards and units 279,289 — 497,277 —

Weighted average number of shares 43,325,704 42,078,271 43,544,325 41,997,683

Diluted earnings per share $ 0.22 $ ( 0.14 ) $ 0.18 $ ( 0.30 )

The following potentially dilutive equity securities were not included in the diluted earnings per share of common stock calculation because they would have had an antidilutive effect:

Three Months Ended March 31,

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

2025 2024 2025 2024

Stock options — 379,436 — 379,436

3 unchanged sentences

Held-to-maturity securities are classified as short-term versus long-term investments based on their maturity dates.

The amortized cost, gross unrealized holding gains and losses, and estimated fair value of long-term and short-term investments by major security type and class of security were as follows as of March 31, 2025 and December 31, 2024 (in thousands):

As of March 31, 2025

The amortized cost, gross unrealized holding gains and losses, and estimated fair value of long-term and short-term investments by major security type and class of security were as follows as of June 30, 2025 and December 31, 2024 (in thousands):

As of June 30, 2025

Long-term investments:

30 unchanged sentences

Future maturities of investments classified as available-for-sale and held-to-maturity are as follows (in thousands):

As of March 31, 2025

As of June 30, 2025

Available-for-sale:

1 unchanged sentence

Due after one year through five years 136,767 137,740

Due after five years through ten years — —

Due after ten years — —

$ 136,767 $ 137,740

9 unchanged sentences

$ 18,589 $ 18,581

The following tables present the gross unrealized losses and related fair values for the Company's investment in available-for-sale securities, grouped by duration of time in a continuous unrealized loss position as of March 31, 2025 and December 31, 2024 (in thousands):

The following tables present the gross unrealized losses and related fair values for the Company's investment in available-for-sale securities, grouped by duration of time in a continuous unrealized loss position as of June 30, 2025 and December 31, 2024 (in thousands):

Less than 12 Months 12 Months or More Total

Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss

As of March 31, 2025

As of June 30, 2025

Treasury securities $ 19,962 $ ( 30 ) $ — $ — $ 19,962 $ ( 30 )

13 unchanged sentences

The Company does not expect material credit losses from its available-for-sale investments, considering the composition of the investment portfolio and the credit rating of these investments.

For those securities, the Company determined it is not likely to, and does not intend to, sell prior to a potential recovery of the cost basis.

The Company determined it is not likely to, and does not intend to, sell securities currently in a loss position prior to a potential recovery of their cost basis.

The Company does not expect material credit losses from its held-to-maturity investments, considering the composition of the investment portfolio and the credit loss history of these investments.

Proceeds from the sales of fixed maturities classified as available-for-sale were $ 29.6 million and $ 15.1 million during the three months ended March 31, 2025 and 2024, respectively.

Proceeds from the sales of fixed maturities classified as available-for-sale were $ 81.2 million and $ 40.2 million during the six months ended June 30, 2025 and 2024, respectively.

Other Investments

The Company has invested $ 7.0 million in the preferred stock of a variable interest entity, Baystride, Inc.

Preferred Stock Investment and Nonmonetary Exchange

The Company invested $ 7.0 million in the preferred stock of a variable interest entity, Baystride, Inc.

("Baystride"), a U.S-based privately held corporation operating in the pet food industry.

The Company does not have power over the activities that most significantly impact the economic performance of the entity and is, therefore, not the primary beneficiary.

The Company has the option to purchase all of the outstanding common stock issued by the entity in August 2027 at an amount approximating its expected fair value.

The preferred stock investment in the entity is redeemable, and therefore, is accounted for as an available-for-sale debt security, and measured at fair value at each balance sheet date — see Note 5.

Additionally, the Company has extended a $ 7.0 million revolving line of credit to Baystride to fund its inventory purchases, which will increase annually by $ 2.0 million until the note’s maturity in 2027.

The Company did not have power over the activities that most significantly impact the economic performance of the entity and was, therefore, not the primary beneficiary.

The preferred stock investment in the entity was redeemable and, therefore, was accounted for as an available-for-sale debt security and measured at fair value at each balance sheet date — see Note 5.

During the three months ended June 30, 2025, the Company entered into a purchase agreement for intellectual property developed by Baystride.

In exchange for this intellectual property, the Company transferred all of its Baystride preferred stock back to Baystride.

The Company concluded that the transaction met the definition of a nonmonetary exchange and an asset acquisition.

The Company determined that the cost to acquire the intellectual property was $ 14.9 million, which was comprised of the fair value of the Baystride preferred stock relinquished of $ 14.8 million and direct transaction costs of $ 0.1 million.

The acquired intellectual property has been recorded as a patent within Intangible assets, net on the Company's consolidated balance sheet and will be amortized over a 20-year useful life.

The nonmonetary exchange resulted in a gain of $ 7.8 million, calculated as the difference between the Company's initial $ 7.0 million investment in Baystride's preferred stock and its $ 14.8 million fair value on the transaction date.

This gain was recorded to Other (income), net within the Company's consolidated statement of operations.

Additionally, the Company has extended a $ 7.0 million revolving line of credit to Baystride to fund its inventory purchases.

Borrowing amounts are subject to limitations based on Baystride’s forecasted revenues and inventory balances.

The Company's investment and amounts loaned under the line of credit are recorded in other long-term assets on its consolidated balance sheet.

The outstanding loan balance under the line of credit, including accrued interest, was $ 1.0 million and $ 1.6 million as of March 31, 2025 and December 31, 2024, respectively.

The Company has also entered into a series of agreements to provide ancillary services to, and receive reimbursement from, Baystride at cost.

The Company provided $ 0.1 million of these services for each of the three months ended March 31, 2025 and 2024.

The outstanding loan balance under the line of credit, including accrued interest, was $ 0.4 million and $ 1.6 million as of June 30, 2025 and December 31, 2024, respectively.

The remaining outstanding loan balance was received from Baystride and the line of credit was extinguished in July 2025.

Allowance for Credit Losses

3 unchanged sentences

Such evaluations are revised as conditions change and new information becomes available.

Based on these considerations, the Company established an allowance for credit losses in 2023 related to its investment in the Baystride preferred stock.

This credit loss allowance was reversed in the fourth quarter of 2024 as the fair value of the Company's investment in Baystride.

was determined to have recovered to an amount above the original investment amount.

The following table presents a rollforward of the allowance for credit losses for this investment (in thousands).

Three Months Ended March 31,

Balance at the beginning of the period $ — $ ( 1,674 )

Recovery of (addition to) allowance for credit losses — —

Balance as of the end of the period $ — $ ( 1,674 )

Based on these considerations, the Company established an allowance for credit losses of $ 1.7 million in the fourth quarter of 2023 related to its investment in the Baystride preferred stock.

There was no change to this allowance during the first six months of 2024, and the credit loss allowance was reversed in the fourth quarter of 2024 as the fair value of the Company's investment in Baystride was determined to have recovered to an amount above the original investment amount.

There was no change to the allowance for credit losses during the six months ended June 30, 2025.

Fair Value Disclosures - Investments

The following table summarizes, by major security type, the Company's assets that are measured at fair value on a recurring basis, and placement within the fair value hierarchy (in thousands):

As of March 31, 2025

As of June 30, 2025

Fair Value Level 1 Level 2 Level 3

5 unchanged sentences

Treasury securities 88,371 — 88,371 —

Preferred stock investment 7,916 — — 7,916

Total $ 235,741 $ 57,309 $ 178,432 $ —

13 unchanged sentences

The fair value of these investments is determined in the same manner as available-for-sale securities and are considered either a Level 1 or Level 2 measurement.

The Company's preferred stock investment (see Note 4) is accounted for as an available-for-sale debt security, and measured at fair value at each balance sheet date.

The estimated fair value of the preferred stock investment is a Level 3 measurement, and is based on certain unobservable inputs such as the value of the underlying enterprise, volatility, time to liquidity, and market interest rates.

Significant changes in any of these unobservable inputs would result in a change in the fair value measurement.

The estimated fair value was $ 7.9 million as of March 31, 2025, unchanged from December 31, 2024.

The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.

There were no transfers between levels for the three months ended March 31, 2025 and the year ended December 31, 2024.

There was no change in the fair value of the Company's preferred stock investment classified as Level 3 during the three months ended March 31, 2025 or 2024.

There were no transfers between levels for the six months ended June 30, 2025 and the year ended December 31, 2024.

The Company's preferred stock investment (see Note 4) was accounted for as an available-for-sale debt security, and measured at fair value at each balance sheet date and as of the transaction date.

The estimated fair value of the preferred stock investment was a Level 3 measurement, and was based on certain unobservable inputs such as the value of the underlying enterprise, volatility, time to liquidity, and market interest rates.

Significant changes in any of these unobservable inputs would result in a change in the fair value measurement.

The following table presents the change in fair value of the Company’s preferred stock investment previously carried at fair value and classified as Level 3 (in thousands):

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

2025 2024 2025 2024

Balance at beginning of period $ 7,916 $ 5,326 $ 7,916 $ 5,326

Reversal of cumulative unrealized gain included in other comprehensive income (loss) (916) — (916) —

Realized gain on nonmonetary exchange of preferred stock investment in Other (income), net 7,783 — 7,783 —

Exchange of preferred stock for intellectual property (14,783) — (14,783) —

Balance at end of period $ — $ 5,326 $ — $ 5,326

Fair Value Disclosures - Other Assets and Liabilities

The Company's other long-term assets balance also included notes receivable of $ 3.7 million and $ 4.3 million as of March 31, 2025 and December 31, 2024, respectively, recorded at their estimated collectible amount.

The Company's other long-term assets balance also included notes receivable of $ 3.1 million and $ 4.3 million as of June 30, 2025 and December 31, 2024, respectively, recorded at their estimated collectible amount.

The Company estimates that the carrying value of the notes receivable approximates the fair value.

2 unchanged sentences

This is a Level 3 measurement.

Based upon the terms of the debt, the carrying amount of long-term debt approximated fair value at March 31, 2025.

Based upon the terms of the debt, the carrying amount of long-term debt approximated fair value at June 30, 2025.

Commitments and Contingencies

7 unchanged sentences

The reserve also includes the Company's estimate of related internal processing costs.

The reserve estimate involves actuarial projections and is based on management's assessment of facts and circumstances currently known, and assumptions about anticipated patterns.

The reserve estimate involves actuarial projections and is based on management's assessment of facts and circumstances currently known, and assumptions about anticipated claims development patterns.

The Company uses generally accepted actuarial methodologies, such as paid loss development methods, in estimating the amount of the reserve for veterinary invoices.

3 unchanged sentences

Summarized below are the changes in the total liability for the Company's subscription business segment (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Subscription 2025 2024

10 unchanged sentences

Reserve at end of period $ 25,907 $ 27,936

The Company had unfavorable development on veterinary invoice reserves of $ 1.7 million for the three months ended March 31, 2025, including unfavorable development of $1.2 million attributable to accident year 2024 and unfavorable development of $0.5 million attributable to accident year 2023 and prior.

The Company had unfavorable development on veterinary invoice reserves of $ 2.1 million for the six months ended June 30, 2025, including unfavorable development of $1.0 million attributable to accident year 2024 and unfavorable development of $1.1 million attributable to accident year 2023 and prior.

The unfavorable development for accident year 2024 was primarily driven by a slower pattern of claims reported by members than initially anticipated.

2 unchanged sentences

Summarized below are the changes in total liability for the Company's other business segment (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Other Business 2025 2024

10 unchanged sentences

Reserve at end of period $ 26,616 $ 32,638

The Company had favorable development on veterinary invoice reserves for the other business segment of $ 4.6 million for the three months ended March 31, 2025, including favorable development on veterinary invoice reserves of $4.4 million attributable to accident year 2024 and favorable development of $0.2 million attributable to accident year 2023 and prior.

The favorable development for all periods was driven by lower frequency and severity than expected.

The Company had favorable development on veterinary invoice reserves for the other business segment of $ 5.5 million for the six months ended June 30, 2025, including favorable development on veterinary invoice reserves of $5.3 million attributable to accident year 2024 and favorable development of $0.2 million attributable to accident year 2023 and prior.

The favorable development for accident year 2024 was primarily driven by faster reporting patterns of claims than initially anticipated in the fourth quarter of 2024.

The favorable development for accident year 2023 and prior was driven by lower frequency and severity than expected.

Reserve for veterinary invoices, by year of occurrence

In the following tables, the reserve for veterinary invoices for each segment is presented as the amount (in thousands) by the year to which the veterinary invoice relates, referred to as the year of occurrence.

Subscription As of March 31, 2025

Subscription As of June 30, 2025

Year of Occurrence

2023 and prior $ 243

Other Business As of March 31, 2025

Other Business As of June 30, 2025

Year of Occurrence

5 unchanged sentences

(c) commitments for revolving loans in an aggregate principal amount at any time outstanding not in excess of $ 15.0 million (Revolving Loans), which may be drawn at any time prior to March 25, 2027 .

To the extent not previously paid, the Initial Term Loan is due and payable on March 25, 2027 , the Delayed Draw Term Loans are due and payable on the earlier of the five-year anniversary of their initial funding or March 25, 2028 , and Revolving Loans are due and payable on March 25, 2027 .

The Company must repay 0.25 % of any then-outstanding Term Loans, together with accrued and unpaid interest, on a quarterly basis.

In June 2025, the Company made a $ 14.9 million principal repayment on the Initial Term Loan in addition to the 0.25 % quarterly mandatory repayment.

The Credit Facility bears interest at a floating base rate plus an applicable margin.

The stated interest rate as of March 31, 2025 was approximately 9.45 % for the original $ 60.0 million term loan and for the aggregate $ 75.0 million term loans.

The stated interest rate as of June 30, 2025 was approximately 9.45 % for the aggregate outstanding term loans.

The Company incurred total debt issuance cost of approximately $ 5.9 million, which is reported in the consolidated balance sheet as a direct reduction from the carrying amount of the Credit Facility and is amortized as interest expense over the term of five years.

2 unchanged sentences

The Credit Agreement contains financial and other covenants .

As of March 31, 2025, the Company was in compliance with all financial and other covenants .

The Company must repay 0.25 % of any then-outstanding Term Loans, together with accrued and unpaid interest, on a quarterly basis.

Future principal payments on outstanding borrowings as of March 31, 2025 are as follows (in thousands):

Year Ending December 31, March 31, 2025

As of June 30, 2025, the Company was in compliance with all financial and other covenants .

Future principal payments on outstanding borrowings as of June 30, 2025 are as follows (in thousands):

Year Ending December 31, As of June 30, 2025

Total $ 116,413

2 unchanged sentences

Stock-based compensation expense recognized in each category of the consolidated statements of operations was as follows (in thousands):

Three Months Ended March 31,

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

2025 2024 2025 2024

Veterinary invoice expense $ 774 $ 854 $ 1,544 $ 1,778

13 unchanged sentences

Forfeited ( 2,731 ) 11.18 —

Outstanding as of March 31, 2025 267,452 14.67 6,038

Exercisable as of March 31, 2025 267,452 $ 14.67 $ 6,038

As of March 31, 2025, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 1.6 years.

Outstanding as of June 30, 2025 237,699 15.16 9,557

Exercisable as of June 30, 2025 237,669 $ 15.16 $ 9,557

As of June 30, 2025, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 1.4 years.

The Company has not granted any new stock options since 2017 and all outstanding options vested prior to January 1, 2022.

7 unchanged sentences

Forfeited ( 79,187 ) 34.36

Unvested shares as of March 31, 2025 1,472,290 $ 40.88

Unvested shares as of June 30, 2025 1,393,567 $ 41.44

Stock-based compensation expenses of $ 55.3 million related to unvested restricted stock units are expected to be recognized over a weighted average period of approximately 2.0 years.

1 unchanged sentence

Common Stock and Preferred Stock

As of March 31, 2025, the Company had 100,000,000 shares of common stock authorized and 42,775,955 shares of common stock outstanding.

As of June 30, 2025, the Company had 100,000,000 shares of common stock authorized and 42,987,772 shares of common stock outstanding.

Holders of common stock are entitled to one vote on each matter properly submitted to the stockholders of the Company except those related to matters concerning possible outstanding preferred stock.

At March 31, 2025, the Company had 10,000,000 shares of undesignated preferred stock authorized for future issuance and did not have any outstanding shares of preferred stock.

At June 30, 2025, the Company had 10,000,000 shares of undesignated preferred stock authorized for future issuance and did not have any outstanding shares of preferred stock.

The holders of common stock are also entitled to receive dividends as and when declared by the board of directors of the Company (the Board), whenever funds are legally available.

3 unchanged sentences

In April 2021, the Board approved a share repurchase program, pursuant to which the Company may, between May 2021 and May 2026, repurchase outstanding shares of the Company's common stock.

The Company repurchased no shares during the three months ended March 31, 2025 and 2024, respectively.

The Company repurchased no shares during the six months ended June 30, 2025 and 2024, respectively.

Accumulated Comprehensive Income (Loss)

A summary of the components of accumulated other comprehensive income (loss) is as follows (in thousands):

For the three months ended March 31, 2025 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

For the three months ended June 30, 2025 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of April 1, 2025 $ ( 1,761 ) $ 1,046 $ ( 715 )

Other comprehensive income 3,202 170 3,372

Balance as of June 30, 2025 $ 1,441 $ 1,216 $ 2,657

For the three months ended June 30, 2024 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of April 1, 2024 $ ( 1,408 ) $ ( 173 ) $ ( 1,581 )

Other comprehensive loss ( 185 ) ( 5 ) ( 190 )

Balance as of June 30, 2024 $ ( 1,593 ) $ ( 178 ) $ ( 1,771 )

For the six months ended June 30, 2025 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of January 1, 2025 $ ( 3,113 ) $ 501 $ ( 2,612 )

Other comprehensive income 4,554 715 5,269

Balance as of March 31, 2025 $ ( 1,761 ) $ 1,046 $ ( 715 )

For the three months ended March 31, 2024 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of June 30, 2025 $ 1,441 $ 1,216 $ 2,657

For the six months ended June 30, 2024 Foreign Currency Translation Net Unrealized Gain (Loss) on Available-for-Sale Securities Total

Balance as of January 1, 2024 $ ( 76 ) $ 479 $ 403

Other comprehensive loss ( 1,517 ) ( 657 ) ( 2,174 )

Balance as of March 31, 2024 $ ( 1,408 ) $ ( 173 ) $ ( 1,581 )

Balance as of June 30, 2024 $ ( 1,593 ) $ ( 178 ) $ ( 1,771 )

In connection with the nonmonetary exchange discussed in Note 4, the Company reclassified $0.9 million of previously unrealized gain from Accumulated other comprehensive income (loss) to Other (income), net during the six months ended June 30, 2025.

The Company has two reporting segments:

11 unchanged sentences

Operating income (loss) of the Company’s segments was as follows (in thousands):

Three Months Ended March 31,

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

2025 2024 2025 2024

Subscription business:

17 unchanged sentences

Loss from investment in joint venture — ( 47 ) ( 305 ) ( 150 )

Operating loss ( 1,473 ) ( 6,137 )

Operating income (loss) 2,314 ( 5,471 ) 841 ( 11,608 )

Interest expense 3,682 3,655 6,893 7,251

Other (income), net ( 11,914 ) ( 3,220 ) ( 15,154 ) ( 6,063 )

Loss before income taxes $ ( 1,444 ) $ ( 6,890 )

Income (loss) before income taxes $ 10,546 $ ( 5,906 ) $ 9,102 $ ( 12,796 )

The following table presents the Company’s revenue by geographic region of the member (in thousands):

Three Months Ended March 31,

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

2025 2024 2025 2024

United States $ 293,979 $ 263,220 $ 579,803 $ 519,193

1 unchanged sentence

Total revenue $ 353,557 $ 314,800 $ 695,532 $ 620,921

Substantially all of the Company’s long-lived assets were located in the United States as of March 31, 2025 and December 31, 2024.

Substantially all of the Company’s long-lived assets were located in the United States as of June 30, 2025 and December 31, 2024.

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