What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-02-13 compared with 2025-02-27 · 165 added, 140 removed, 603 unchanged (34% of the section changed)

36 unchanged sentences

Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

We provide medical insurance for cats and dogs in the United States, Canada, certain countries in Continental Europe, and Australia.

Through our data-driven, vertically-integrated approach, we develop and offer high value medical insurance products, priced specifically for each pet’s unique characteristics and coverage level.

We provide medical insurance for cats and dogs in the United States, Canada, and certain countries in Continental Europe.

Through our data-driven, vertically-integrated approach, we develop and offer high-value medical insurance products, priced to take into account each pet’s unique characteristics and coverage level.

Our growing and loyal membership base provides us with highly predictable and recurring revenue.

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Within this segment, we also offer products in certain countries in Continental Europe, which are currently underwritten by third parties who pay us commissions that we recognize as revenue.

Going forward our intent is to assume full insurance risk for these products, either through direct underwriting or reinsurance arrangements.

We generate leads for our subscription business segment from a diverse set of member acquisition channels, which we then seek to convert into members through our contact center, website and other direct-to-consumer activities.

These channels include leads from third-parties such as veterinarians and referrals from existing members.

These channels include referrals from third-parties such as veterinarians and existing members.

Veterinary hospitals represent our largest referral source.

Our “Territory Partners” travel through their territories to have face-to-face visits with veterinarians and their staff.

Our “Territory Partners” create relationships with veterinary hospital teams through face-to-face visits.

Territory Partners are dedicated to cultivating direct veterinary relationships and helping those veterinarians understand the benefits of high-quality medical insurance.

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We also receive a significant number of new leads from existing members adding pets and referring their friends and family members.

Our direct-to-consumer acquisition channels serve as important resources for pet owner education and drive new member leads and conversion.

Our direct-to-consumer acquisition channels serve as important resources for pet parent education and drive new member leads and conversion.

We monitor average pet acquisition cost to evaluate the efficiency in acquiring new members and measure effectiveness based on our targeted return on investment.

Our other business segment is comprised of revenue from other product offerings, with third parties with whom we generally have a business-to-business relationship.

This business segment has, and targets, a lower margin profile than our subscription segment and is not part of our core business strategy.

The largest source of revenue within this segment is from our long-standing contractual relationship with Pets Best, a third-party partner we have worked with since 2015.

Our other business segment generates revenue from other product offerings, primarily by underwriting policies on behalf of third parties with whom we generally have a business-to-business relationship.

This business segment has, and targets, a significantly lower margin profile than our subscription business segment and is not part of our core business strategy.

The largest source of revenue within this segment is from our long-standing contractual relationship as an underwriter for Pets Best, a third-party insurance provider we have worked with since 2015.

We expect that enrollment from Pets Best will continue to decline as it engages other third-party underwriters.

Additional products in this segment include the U.S.

Department of Veterans Affairs program and employer-sponsored programs, primarily for companies with animal health related operations.

Key Operating Metrics

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Total pets enrolled.

Total pets enrolled reflects the number of pets enrolled in one of the insurance products offered in our subscription business segment and our other business segment at the end of each period presented.

Total pets enrolled reflects the number of pets enrolled in one of the insurance products offered in our subscription business segment or our other business segment at the end of each period presented.

We monitor total pets enrolled because it provides an indication of the growth of our consolidated business.

Total subscription pets enrolled.

Total subscription pets enrolled reflects the number of pets in active memberships at the end of each period presented.

Total subscription pets enrolled reflects the number of pets enrolled in one of the insurance products offered in our subscription business segment at the end of each period presented.

We monitor total subscription pets enrolled because it provides an indication of the growth of our subscription business.

Because our subscription business has a significantly higher margin profile than our other business, changes in the rate of growth of our subscription pet enrollment tend to have a greater impact on our consolidated performance.

Monthly average revenue per pet.

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We exclude stock-based compensation expense because the amount varies from period to period based on number of awards issued and market-based valuation inputs.

We offset sign-up fee revenue because it is a one-time charge to new members collected at the time of enrollment used to partially offset initial setup costs, which are included in new pet acquisition expenses.

We offset sign-up fee revenue because it is a one-time charge to some new members collected at the time of enrollment used to partially offset initial setup costs, which are included in new pet acquisition expenses.

We exclude other business segment pet acquisition expense because that does not relate to subscription enrollments.

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We define non-GAAP fixed expenses as the total of technology and development expense and general and administrative expense, less stock-based compensation expense, non-recurring transaction and restructuring expense, and development expenses related to exploring and developing new products and offerings that generally are in the pre-revenue stage or not at scale.

The following tables present the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for the periods presented (in thousands):

The following tables present the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for years ended December 31, 2025, 2024 and 2023, and for each of the last eight fiscal quarters (in thousands, except percentages).

Year Ended December 31,

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Non-recurring transaction or restructuring expenses (3)

— (4,175) (372)

Development expenses (4)

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We account for such expense as stock-based compensation in accordance with GAAP, but we do not include it in any non-GAAP adjustments.

Stock-based compensation associated with bonuses was approximately $1.5 million and $1.3 million for the years ended December 31, 2024 and 2023, respectively.

(2) Consists of business acquisition transaction expenses, severance and legal costs due to certain executive departures, and a $3.8 million non-recurring settlement of accounts receivable in the first quarter of 2023 related to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers.

(3)Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant.

Stock-based compensation associated with bonuses was approximately $0.8 million, $1.5 million and $1.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.

(2) Excludes the portion of stock-based compensation expense attributable to the other business segment.

(3) Consists of business acquisition transaction expenses, severance and legal costs due to certain executive departures, and a $3.8 million non-recurring settlement of accounts receivable in 2023 related to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers.

(4) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant

Three Months Ended

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(6,617) (6,551) (6,393) (5,396) (5,277) (5,258) (4,949) (4,258)

Non-recurring transaction or restructuring expenses (2)

— — — — — (8) (65) (4,102)

Development expenses (3)

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We account for such expense as stock-based compensation in accordance with GAAP, but we do not include it in any non-GAAP adjustments.

Stock-based compensation associated with bonuses was approximately $0.3 million and $0.7 million for the three months ended December 31, 2024 and 2023, respectively.

(3) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant (4) Excludes the portion of stock-based compensation expense attributable to the other business segment

Stock-based compensation associated with bonuses was approximately $0.2 million, $0.3 million and $0.7 million for the three months ended December 31, 2025, 2024 and 2023, respectively.

(2) Excludes the portion of stock-based compensation expense attributable to the other business segment (3) Consists of costs related to product exploration and development that are pre-revenue and historically have been insignificant

When determining our PAC, we calculate net acquisition cost for a more comparable metric across periods.

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We exclude pet acquisition expense for commission-based policies because the revenue of these products is earned from commissions from a third-party underwriter, as opposed to the subscription payments earned by the remainder of our subscription business.

The following tables reconcile GAAP new pet acquisition expense to non-GAAP net acquisition cost (in thousands) for the years ended December 31, 2025, 2024, and 2023, and for each of the last eight fiscal quarters:

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Stock-based compensation expense (1)

(7,446) (6,908) (7,000)

Other business pet acquisition expense (90) (39) (200)

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Stock-based compensation expense (1)

(1,530) (1,527) (1,516) (2,873) (1,482) (1,503) (2,066) (1,857)

Other business pet acquisition expense (8) (5) (74) (3) (8) (8) (10) (13)

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We operate our subscription business segment similar to other subscription-based businesses, with a focus on achieving a target margin prior to our pet acquisition expense and acquiring as many pets as possible at our targeted average estimated internal rate of return.

Within our subscription business, we also provide "Powered by Trupanion" pet insurance product offerings marketed by third parties, low and medium average revenue per pet products marketed under the brand names Furkin and PHI Direct in Canada, and a Trupanion branded product in Germany and Switzerland.

Within our subscription business, we also currently provide "Powered by Trupanion" pet insurance product offerings marketed by third parties, low and medium average revenue per pet products marketed under the brand names Furkin and PHI Direct in Canada, and a Trupanion branded product in Germany and Switzerland.

We either directly underwrite or assume full insurance risk for these products through reinsurance arrangements.

We provide a full suite of services and support for these products and they are designed to align with the target margin profile of our subscription business segment.

Within our subscription business segment we also offer products in certain countries in Continental Europe, which are underwritten by third parties who pay us commissions that we recognize as revenue.

Our other business segment is comprised of revenue from other product offerings with third parties with whom we generally have a business-to-business relationship.

This business segment has, and targets, a different margin profile than our subscription business segment and includes revenue from writing policies on behalf of third parties and revenue from other pet insurance

The largest source of revenue within this segment is from our long-standing contractual relationship with Pets Best, a third-partner we have worked with since 2015.

Within this segment we also offer products in certain countries in Continental Europe, which are currently underwritten by third parties who pay us commissions that we recognize as revenue.

This business segment has and targets, a significantly lower margin profile than our subscription business and is not part of our core business strategy.

The largest source of revenue within this segment is from our long-standing contractual relationship with Pets Best, a third party insurance provider we have worked with since 2015.

Additional products in this segment include the U.S.

Department of Veterans Affairs program and employer-sponsored programs.

Department of Veterans Affairs program and employer-sponsored programs, primarily for companies with animal health related operations.

We generate revenue in our subscription business segment primarily from subscription payments for our pet medical insurance.

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Membership may be canceled at any time without penalty, and we issue a refund for the unused portion of the canceled membership.

In addition to subscription payments, we generate a small amount of revenue from charging a one-time sign-up fee to new members collected at the time of enrollment to partially offset initial setup costs.

In addition to subscription payments, we generate a small amount of revenue from charging a one-time sign-up fee collected at the time of new enrollment to partially offset initial setup costs.

Sign-up fees are related to Trupanion’s obligation to provide insurance coverage and are recognized over the policy term.

We also generate a portion of our subscription business segment revenue through commissions earned in our European markets, where policies are currently underwritten by third parties and Trupanion is acting as an insurance broker.

We generate revenue in our other business segment primarily from writing policies on behalf of third parties where we do not undertake the direct consumer marketing.

This segment also includes revenue from other pet insurance products that have a different margin profile from our subscription business.

We also generate a portion of our subscription business segment revenue through commissions earned in certain European markets, where policies are currently underwritten by third parties and Trupanion is acting as an insurance broker.

We generate revenue in our other business segment primarily from writing policies on behalf of third parties where we do not undertake direct consumer marketing.

This segment also includes revenue from other pet insurance products that have a significantly lower margin profile from our subscription business.

Cost of Revenue

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Veterinary invoice expense

Veterinary invoice expense includes our costs to review and pay veterinary invoices, administer the payments, and provide member services, and other operating expenses directly or indirectly related to the claims process.

We also accrue for veterinary invoices that have been incurred but not yet received and for the estimated internal costs of processing those invoices.

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Other cost of revenue

Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, Territory Partner fees upon policy renewals, payment processing fees and premium tax expenses.

Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, Territory Partner commissions per member renewal, payment processing fees and premium tax expenses.

Other cost of revenue for the other business segment includes the commissions we pay to unaffiliated general agents, costs to administer the programs in the other business segment and premium taxes on the sales in this segment.

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Technology and development

Technology and development expenses primarily consist of personnel costs and related expenses for our technology staff, which includes information technology development and infrastructure support, including third-party services.

Technology and development expenses primarily consist of personnel costs and related expenses for our technology staff, which includes information technology development, security, infrastructure support, and third-party services.

It also includes expenses associated with development in new geographies and new products and offerings.

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New pet acquisition expense

New pet acquisition expenses primarily consist of costs, including personnel costs, to educate veterinarians and consumers about the benefits of Trupanion, to generate leads and to convert leads into enrolled pets, as well as print, online and promotional advertising costs.

New pet acquisition expenses primarily consist of costs to acquire a pet (including costs associated directly to supporting the first year of a member), personnel costs, costs to educate veterinarians and consumers about the benefits of Trupanion, costs to generate leads and to convert leads into enrolled pets, as well as print, online and promotional advertising costs.

Goodwill impairment charges

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Gain (loss) from investment in joint venture

Gain (loss) from investment in joint venture consists of the share of income and losses from our equity method investment in a joint venture, as well as income and expenses associated with administrative services provided to the joint venture.

Gain (loss) from investment in joint venture consists of the share of income and losses from our equity method investment in a joint venture in Australia, as well as income and expenses associated with administrative services provided to the joint venture.

In March 2025, we restructured this relationship from a joint venture to a brand license and services arrangement.

Stock-based compensation

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For example, prices from our plans could vary depending on the relative cost of veterinary care in different countries or areas or whether the pet is a dog or a cat.

As our mix of business between products and geographies changes, our metrics, such as our monthly average revenue per pet, and our exposure to foreign exchange fluctuations will be impacted.

As our mix of business between products and geographies changes, our metrics, such as our monthly average revenue per pet, and our exposure to foreign exchange

fluctuations will be impacted.

We expect our international business, additional product offerings and "Powered by Trupanion" plans to grow and, in turn, we expect these effects to increase.

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Total operating expenses 216,869 188,130 171,456

Gain (loss) from investment in joint venture (182) (219) (253)

Operating loss (9,514) (40,659) (43,001)

Loss from investment in joint venture (305) (182) (219)

Operating income (loss) 13,837 (9,514) (40,659)

Interest expense 13,759 14,498 12,077

Other expense (income), net (14,374) (7,701) (3,072)

Loss before income taxes (9,638) (45,035) (44,196)

Other (income), net (21,916) (14,374) (7,701)

Income (loss) before income taxes 21,994 (9,638) (45,035)

Income tax expense (benefit) 2,561 (5) (342)

Net loss $ (9,633) $ (44,693) $ (44,672)

Net income (loss) $ 19,433 $ (9,633) $ (44,693)

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

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(in thousands)

Cost of revenue $ 5,523 $ 5,279 $ 6,484

Veterinary invoice expense (2)

$ 2,841 $ 3,460 $ 3,667

Other cost of revenue (2)

2,284 2,063 1,612

Technology and development 6,036 4,934 2,846

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Total stock-based compensation expense $ 38,312 $ 33,432 $ 33,161

(2) Veterinary invoice expense and Other cost of revenue together comprise stock-based compensation expense included within Total cost of revenue.

Year Ended December 31,

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Total operating expenses 15 14 15

Gain (loss) from investment in joint venture — — —

Operating loss (1) (4) (5)

Loss from investment in joint venture — — —

Operating income (loss) 1 (1) (4)

Interest expense (1) 1 1

Other expense (income), net 2 (1) (1)

Loss before income taxes (1) (4) (5)

Income (loss) before income taxes 2 (1) (4)

Income tax expense (benefit) — — —

Net loss (1) % (4) % (5) %

Net income (loss) 2 % (1) % (4) %

Stock-based compensation expense:

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Year ended December 31, 2025 compared to year ended December 31, 2024.

Total revenue increased by $177.1 million, or 16%, to $1,285.7 million for the year ended December 31, 2024.

Revenue from our subscription business segment increased by $143.6 million, or 20%, to $856.5 million for the year ended December 31, 2024.

This increase was primarily due to a 12% increase in monthly average revenue per pet and an increase in subscription pet months (the sum of pets enrolled for each month during a period) for policies underwritten by Trupanion.

Revenue from our other business segment increased by $33.5 million, or 8%, to $429.2 million for the year ended December 31, 2024.

This increase was primarily driven by a 17% increase in monthly average revenue per pet in this segment, partially offset by a decrease in pet months in this segment primarily reflecting the expected run off of pets we historically insured for a third-party.

Total revenue increased by $153.6 million, or 12%, to $1,439.3 million for the twelve months ended December 31, 2025.

Revenue from our subscription business segment increased by $132.8 million, or 16%, to $989.3 million for the twelve months ended December 31, 2025.

This increase was primarily due to an 11% increase in monthly average revenue per pet and an increase in subscription pet months (the sum of pets enrolled for each month during a period) for policies underwritten by Trupanion.

Our subscription pets enrolled increased by 54,961 pets, or 5%, to 1,096,137 for the twelve months ended at December 31, 2025, which was consistent with the growth rate of pets enrolled in the prior year period.

Revenue from our other business segment increased by $20.8 million, or 5%, to $450 million for the twelve months ended December 31, 2025.

This increase was primarily driven by a 20% increase in monthly average revenue per pet in this segment, partially offset by a decrease in pet months primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Cost of Revenue

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Year ended December 31, 2025 compared to year ended December 31, 2024.

Total cost of revenue for our subscription business segment increased $93.2 million, or 15%, to $706.9 million for the year ended December 31, 2024.

Total cost of revenue for our subscription business segment increased by $84.0 million, or 12%, to $790.9 million, for the twelve months ended December 31, 2025.

This increase was driven by a $75.7 million, or 12%, increase in veterinary invoice expense and an $8.3 million, or 10%, increase in other cost of revenue.

The 12% increase in veterinary invoice expense was primarily driven by an 8% increase in veterinary invoice expense per pet and an increase in total subscription pet months for policies underwritten by Trupanion.

The 10% increase in other cost of revenue was primarily due to general increases in costs attributable to growth in our membership and subscription revenue.

Subscription business total cost of revenue decreased from 83% to 80% of revenue year-over-year primarily due to growth in subscription revenue outpacing growth in subscription veterinary invoice expense.

Total cost of revenue for our other business segment increased by $17.4 million, or 4%, to $417.4 million for the twelve months ended December 31, 2025.

This increase was driven by a $4.1 million, or 1%, increase in veterinary invoice expense and a $13.3 million, or 18% increase in other cost of revenue.

The 15% increase in veterinary invoice expense was driven by an increase in total subscription pet months for policies underwritten by Trupanion and a 7% increase in veterinary invoice expense per pet.

The 17% increase in other cost of revenue was primarily driven by general increases in costs attributable to growth in our membership and subscription revenue.

Subscription business cost of revenue decreased from 86% to 83% of revenue year-over-year.

The primary drivers of this margin improvement were our ongoing pricing actions and continued efficiency gain in our cost of processing claims.

Total cost of revenue for our other business segment increased by $36.1 million, or 10%, to $400.0 million for the year ended December 31, 2024.

The increase was primarily driven by a $36.9 million, or 13%, increase in veterinary invoice expense, partially offset by a $0.7 million, or 1%, decrease in other cost of revenue.

The 13% increase in veterinary invoice expense was primarily driven by a 21% increase in veterinary invoice expense per pet, offset by a decrease in pet months in this segment primarily reflecting the expected run off of pets we historically insured for a third-party.

The 1% decrease in other cost of revenue was primarily driven by decreases in premium-based expenses.

Cost of revenue for the other business segment increased from 92% to 93% of revenue year-over-year.

The 1% increase in veterinary invoice expense was primarily driven by a 16% increase in veterinary invoice expense per pet, partially offset by a decrease in pet months in this segment primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Within our other business segment, fluctuations in other cost of revenue are largely driven by trends in revenue and veterinary invoice expense.

Total cost of revenue for the other business segment decreased from 94% to 93% of revenue year-over-year.

Technology and Development Expenses

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Year ended December 31, 2025 compared to year ended December 31, 2024.

Technology and development expenses increased by $9.9 million, or 46%, to $31.3 million for the year ended December 31, 2024.

This increase was primarily due a $6.8 million reduction in capitalized expenditures related to internally-developed software projects launched in early 2024, a $1.0 million increase in general compensation and other employee-related expenses, a $1.3 million increase in infrastructure-related expenses, and an increase of $0.8 million in development expense.

Technology and development expenses remained constant at 2% of total revenue year over year.

Technology and development expenses increased by $6.6 million, or 21%, to $37.8 million for the twelve months ended December 31, 2025.

This increase was primarily due to a $4.7 million increase in general compensation and other employee-related expenses, a $1.3 million reduction in capitalized expenditures related to internally developed software projects, and a $0.7 million increase in new product exploration and development expenses.

Technology and development expenses increased from 2% to 3% of total revenue year-over-year.

General and Administrative Expenses

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Year ended December 31, 2025 compared to year ended December 31, 2024.

General and administrative expenses increased by $3.5 million, or 6%, to $63.7 million for the year ended December 31, 2024.

This increase was driven by increases of $6.6 million in general compensation and other employee-related expenses, $2.7 million in professional services, and $2.3 million in underwriting fees related to our Canadian business.

These increases were offset by two charges that were recorded during the first quarter of 2023 that led to a decrease in expense when comparing periods, a $4.8 million stock-based compensation charge following certain executive departures and a $3.8 million charge related to a negotiated settlement of uncollected premiums in connection with the transition of underwriting a third-party business to other insurers.

General and administrative expense remained constant at 5% of total revenue year-over-year.

General and administrative expenses increased by $12.9 million, or 20%, to $76.6 million for the twelve months ended December 31, 2025.

This increase was driven by increases of $12.1 million in general compensation and other employee-related expenses and $1.9 million in underwriting fees related to our Canadian business, partially offset by a $0.8 million decrease in professional services and a $0.3 million decrease in other miscellaneous expenses.

General and administrative expenses remained constant at 5% of total revenue year-over-year.

New Pet Acquisition Expense

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Year ended December 31, 2025 compared to year ended December 31, 2024.

New pet acquisition expense decreased by $6.0 million, or 8%, to $71.4 million for the year ended December 31, 2024.

This decrease was primarily due to a decrease in expenses related to generating leads and driving conversion, particularly in the first half of 2024, as we focused on growth in our more efficient channels.

New pet acquisition expense as a percentage of revenue was 6% for the year ended December 31, 2024 compared to 7% in the same period last year, as we were able to stay disciplined with our discretionary pet acquisition spend, while still managing to grow total enrolled subscription pets, excluding those related to managing general agent policies, by 5%.

New pet acquisition expenses increased by $14.0 million, or 20%, to $85.4 million for the twelve months ended December 31, 2025.

This increase was primarily driven by increased marketing spend as we have begun deploying more capital to acquire new pets in a disciplined manner.

New pet acquisition expense as a percentage of revenue remained constant at 6% as we were able to stay disciplined with our discretionary pet acquisition spend.

Depreciation and Amortization

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Year ended December 31, 2025 compared to year ended December 31, 2024.

Depreciation and amortization expense increased by $4.0 million, or 32%, to $16.5 million for the year ended December 31, 2024 primarily driven by an increase in in-service internally developed software projects during the period.

Depreciation and amortization expense decreased by $0.6 million, or 4%, to $15.8 million for the twelve months ended December 31, 2025, primarily driven by fewer internally developed software projects placed in-service during the period.

Total Other Expense (Income), Net

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Interest expense $ 13,759 $ 14,498 $ 12,077 (5)% 20%

Other expense (income), net (14,374) (7,701) (3,072) 87 151

Other (income), net (21,916) (14,374) (7,701) 52 87

Total other (income) expense, net $ (8,157) $ 124 $ 4,376 (6,678)% (97)%

1 unchanged sentence

Year ended December 31, 2025 compared to year ended December 31, 2024.

Total other expense decreased by $4.3 million to $0.1 million for the year ended December 31, 2024 primarily due to an increase in interest income from our investments partially offset by an increase in interest expense.

Additionally, in 2023 total other expense included a credit loss of $1.7 million related to our preferred stock investment in Baystride, Inc.

This loss was subsequently determined to be recovered, and was reversed through other expense during the year ended December 31, 2024.

Total other (income) expense, net increased by $8.3 million from expense of $0.1 million to income of $8.2 million for the twelve months ended December 31, 2025, primarily due to a $7.8 million realized gain on the nonmonetary exchange of our Baystride preferred stock investment for intellectual property developed by Baystride and a $0.7 million decrease in interest expense.

Income Tax Expense (Benefit)

Year ended December 31, 2025 compared to year ended December 31, 2024.

Income tax expense (benefit) increased by $2.6 million from a benefit of less than $0.1 million to expense of $2.6 million for the twelve months ended December 31 2025, primarily due to the transfer of our Canadian insurance business to GPIC, resulting in an increase in taxable income in Canada where it is unable to be offset by historical U.S.

Stock-Based Compensation

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Stock-based compensation is included in the cost and expense line items in the consolidated statements of operations, discussed above.

Stock-based compensation expense in total was $33.4 million for the year ended December 31, 2024, an increase from $33.2 million in the prior year period.

Stock-based compensation expense increased from $33.4 million to $38.3 million for the twelve months ended December 31, 2025.

The amount of stock-based compensation recognized largely reflects the timing and vesting of our annual performance grants, calculated according to our equity incentive plan.

Additionally, the year ended December 31, 2023, included $4.8 million in stock-based compensation as a result of charges taken after certain executive departures.

Quarterly Results of Operations

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Interest expense 4,076 2,790 3,682 3,211 3,427 3,820 3,655 3,596

Other expense (income), net (4,773) (3,538) (3,220) (2,843) (1,256) (2,465) (2,078) (1,902)

Other (income), net (3,232) (3,530) (11,914) (3,240) (4,773) (3,538) (3,220) (2,843)

Income (loss) before income taxes 6,293 6,599 10,546 (1,444) 1,694 1,464 (5,906) (6,890)

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(in thousands)

Cost of revenue $ 1,337 $ 1,401 $ 1,395 $ 1,390 $ 1,478 $ 1,176 $ 1,307 $ 1,318

Veterinary invoice expense (2)

$ 620 $ 677 $ 774 $ 770 $ 835 $ 847 $ 854 $ 924

Other cost of revenue (2)

605 585 605 489 502 554 541 466

Technology and development 1,710 1,705 1,470 1,151 1,160 1,259 1,261 1,254

2 unchanged sentences

Total stock-based compensation expense $ 9,527 $ 9,499 $ 9,456 $ 9,830 $ 8,294 $ 8,340 $ 8,646 $ 8,152

Three Months Ended

31, 2024 Sep.

30, 2024 Jun.

30, 2024 Mar.

31, 2024 Dec.

31, 2023 Sep.

30, 2023 Jun.

30, 2023 Mar.

Other Financial and Operational Data:

Total Business:

Total pets enrolled (at period end) 1,677,570 1,688,903 1,699,643 1,708,017 1,714,473 1,712,177 1,679,659 1,616,865

Subscription Business:

Total subscription pets enrolled (at period end) 1,041,212 1,032,042 1,020,934 1,006,168 991,426 969,322 943,958 906,369

Monthly average revenue per pet $ 76.02 $ 74.27 $ 71.72 $ 69.79 $ 67.07 $ 65.82 $ 64.41 $ 63.58

Average pet acquisition cost (PAC) $ 261 $ 243 $ 231 $ 207 $ 217 $ 212 $ 236 $ 247

Average monthly retention 98.25 % 98.29 % 98.34 % 98.41 % 98.49 % 98.55 % 98.61 % 98.65 %

(2) Veterinary invoice expense and Other cost of revenue together comprise stock-based compensation expense included within Total cost of revenue (in thousands).

Three Months Ended

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Interest expense (1) (1) (1) 1 1 1 1 1

Other expense (income), net (1) (1) (1) (1) — (1) (1) (1)

Other (income), net 1 1 3 (1) (1) (1) (1) (1)

Income (loss) before income taxes 2 2 3 — 1 — (2) (2)

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2025 2024 2023

Net cash provided by (used in) operating activities $ 48,287 $ 18,638 $ (8,000)

Net cash provided by operating activities $ 89,488 $ 48,287 $ 18,638

Net cash provided by (used in) investing activities (95,887) (13,457) 7,639

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Our primary requirements for liquidity are paying veterinary invoices, funding and growing our operations, funding our capital requirements, investing in new member acquisition, investing in enhancements to our member experience, and servicing debt.

We have certain contractual obligations in the normal course of business, including obligations and commitments relating to our Credit Facility, non-cancellable vendor purchase agreements, as well as future payments of veterinary invoices.

We have certain contractual obligations in the normal course of business, including obligations and commitments relating to our credit arrangements, non-cancellable vendor purchase agreements, as well as future payments of veterinary invoices.

Refer to Note 9, Reserve for Veterinary Invoices, included in Item 8 of Part II of this 10-K, for further details on anticipated cash outflows.

Most recently, our primary sources of liquidity have been cash provided by operations and available borrowings from our Credit Facility.

We believe these sources are sufficient to fund our operations and capital requirements for the next 12 months.

Most recently, our primary source of liquidity has been cash provided by our operations.

We believe our operating cash flow is sufficient to fund our operations and capital requirements for the next 12 months.

As we continue to grow and consider strategic opportunities, however, we may explore additional financing to fund our operations and growth or for strategic purposes.

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As of December 31, 2025, we had $370.7 million in cash, cash equivalents and short-term investments, of which $320.7 million was held by our insurance entities.

Outside of insurance entities, we held $35.4 million in cash, cash equivalents and short-term investments with an additional $15.0 million available under our Credit Facility.

Our insurance entities maintained $288.0 million of capital surplus.

The ability to distribute any portion of this capital surplus to our parent company, and the timing of any distribution, may be subject to regulatory limitations and may be delayed or limited from time to time.

Outside of insurance entities, we held $50.0 million in cash, cash equivalents and short-term investments with an additional $5.0 million available under our PNC Facility.

In April 2021, our board of directors approved a share repurchase program, pursuant to which we may, between May 2021 and May 2026, repurchase outstanding shares of our common stock.

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Operating Cash Flows

Net cash provided by operating activities was $48.3 million for the year ended December 31, 2024, compared to $18.6 million net cash provided by operating activities for the year ended December 31, 2023.

This increase was primarily driven by improved operating results largely driven by higher revenue and improved Subscription Business margins, offset by timing differences in other working capital activities.

Net cash provided by operating activities was $89.5 million for the year ended December 31, 2025, compared to $48.3 million for the year ended December 31, 2024.

This increase was primarily driven by improved operating results largely driven by higher revenue and improved Subscription Business margins and timing differences in other working capital activities.

Changes in accounts receivable and deferred revenue were primarily related to annual policies with annual payment terms within our Other Business segment.

Changes in our reserve for veterinary invoices are driven by multiple factors, including ongoing analysis of claims frequency and severity as well as changes in claims inventory at period end.

Changes in our reserve for veterinary invoices are driven by multiple factors, including ongoing analysis of claims frequency and severity.

Additionally, changes in our accounts payable, accrued liabilities, and other liabilities are primarily due to differences in timing of payments.

Investing Cash Flows

Net cash used by investing activities was $13.5 million for the year ended December 31, 2024, primarily consisting of $9.7 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing, and internal policy management improvements and $5.8 million in purchases, net of sales and maturities, of investment securities.

Net cash provided by investing activities was $7.6 million for the year ended December 31, 2023, primarily consisting of $24.3 million in sales and maturities of investment securities, net of purchases, offset by $18.3 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing, and internal policy management improvements.

Net cash used in investing activities was $95.9 million for the year ended December 31, 2025, primarily consisting of purchases of investment securities of $256.0 million as well as $14.1 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing and internal policy management improvements, partially offset by $172.6 million in sales and maturities of investment securities.

Net cash used in investing activities was $13.5 million for the year ended December 31, 2024, primarily consisting of purchases of investment securities of $133.5 million as well as $9.7 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing, and internal policy management improvements, partially offset by $127.7 million in sales and maturities of investment securities.

Financing Cash Flows

Net cash used by financing activities was $4.0 million for the year ended December 31, 2024, primarily consisting of $2.5 million in shares withheld to satisfy tax withholdings and $1.4 million in repayments on the Credit Facility.

Net cash provided by financing activities was $59.1 million for the year ended December 31, 2023, primarily consisting of $60.1 million in proceeds from the Credit Facility, partially offset by $1.7 million in debt repayments.

Net cash used in financing activities was $22.9 million for the year ended December 31, 2025, primarily consisting of $131.9 million of repayments on the Prior Credit Facility and $2.5 million of repayments on the PNC Facility as well as $3.7 million in shares withheld to satisfy tax withholdings, partially offset by $114.2 million in proceeds from debt financing, net of financing fees.

Net cash used in financing activities was $4.0 million for the year ended December 31, 2024, primarily consisting of $2.5 million in shares withheld to satisfy tax withholdings and $1.4 million in repayments on the Prior Credit Facility.

Long-Term Debt

Our Credit Facility provides us with up to $150.0 million of credit.

As of December 31, 2024, we issued term loans totaling $135.0 million under the Credit Facility.

The Credit Facility is secured by substantially all of our assets and those of our subsidiaries.

Refer to Note 10, Debt, included in Item 8 of this report, for further details.

Prior Credit Facility

Our Prior Credit Facility provided us with up to $150.0 million of credit, and we had outstanding term loans totaling $116.2 million prior to repayment.

In November 2025, we repaid all amounts under the Prior Credit Facility utilizing proceeds from our new PNC facility.

In November 2025, we entered into a credit agreement (the "PNC Agreement") with PNC Bank, National Association, as the administrative agent.

The PNC Agreement provides for a term loan facility of $100.0 million and a revolving credit facility of $20.0 million (collectively, the "PNC Facility").

The PNC Facility matures in November 2028.

Loans under the PNC Facility bear interest at a reference rate plus an applicable margin, which will generally be the SOFR reference rate plus 2.75% per annum.

The Company will make quarterly principal payments of $2.5 million on the term loan facility.

The Company may voluntarily prepay loans or reduce revolving commitments under the PNC Facility at any time without premium or penalty.

The loans under the PNC Agreement are secured by substantially all of our assets.

The PNC Agreement contains financial and other covenants, including quarterly financial ratios, and it includes limitations on, among other things, indebtedness, liens, investments, and mergers or similar transactions.

The majority of our investments are held by our insurance entities to satisfy risk-based capital requirements (also referred to as minimum capital requirements) of applicable state and federal regulators.

These regulatory requirements provide a method for analyzing the minimum amount of capital (statutory capital and surplus plus other adjustments) appropriate for an insurance company to support its overall business operations, taking into account the risk characteristics of the company’s assets, liabilities and certain other items .

An insurance entity cannot use this capital for general operating expenses without regulatory approval.

An insurance company found to have insufficient statutory capital based on its risk-based or minimum capital test requirements or otherwise fails to satisfy other applicable statutory requirements may be subject to varying levels of additional regulatory oversight.

As of December 31, 2025, our insurance entities collectively held $88.1 million in cash and cash equivalents, to be used for operating expenses of our insurance entities, $232.6 million in short-term investments and $299.6 million in other current assets.

Most of the assets in our insurance entities are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate.

In addition to minimum capital requirements the majority of assets in our insurance entities are subject to dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate.

We are subject to comprehensive regulation and supervision in the jurisdictions where we conduct business, including requirements regarding our capital structure, ownership, financial condition, general business operations, transactions between affiliated entities and payment of dividends from our insurance subsidiaries.

We are also subject to market conduct examinations of our management and operations.

The National Association of Insurance Commissioners ("NAIC") has approved a series of uniform statutory accounting principles applicable in some form in all states.

Developed to ensure insurance companies maintain sufficient capital to pay claims and remain solvent, these principles conservatively value assets and liabilities and usually result in differences from financial statements prepared in accordance with U.S.

The NAIC has also adopted risk-based capital requirements for life, health and property and casualty insurance companies, which require APIC and ZPIC to maintain certain levels of surplus to support our overall business operations in consideration of our size and risk profile.

If we fail to maintain the amount of risk-based capital required, we will be subject to additional regulatory oversight.

To comply with these regulations, we may be required to maintain capital that we would otherwise invest in our growth and operations.

NAIC also has adopted a pet insurance model act to establish regulatory standards for the pet insurance industry, related to how insurers enforce waiting periods, certain policy conditions, and the sale of pet insurance in general.

As of January 2026, approximately 17 states have either adopted these NAIC standards or have enacted their own versions.

Although U.S.

federal law generally does not directly regulate the insurance industry, various federal regulatory and legislative changes have been proposed in the past and could be proposed in the future, including proposed federal regulation that could supplement or replace the current system of state regulation of insurers.

It is not possible to predict whether any of these proposals might be adopted, or the effect federal involvement in insurance may have on us.

American Pet Insurance Company ("APIC")

The majority of our investments are held by our insurance entities to satisfy risk-based capital requirements of our regulators based on requirements published by the National Association of Insurance Commissioners ("NAIC").

The NAIC requirements provide a method for analyzing the minimum amount of risk-based capital (statutory capital and surplus plus other adjustments) appropriate for an insurance company to support its overall business operations, taking into account the risk characteristics of the company’s assets, liabilities and certain other items .

An insurance company found to have insufficient statutory capital based on its risk-based capital ratio may be subject to varying levels of additional regulatory oversight depending on the level of capital inadequacy.

APIC must hold certain capital amounts in order to comply with the statutory regulations and, therefore, we cannot use these amounts for general operating purposes without regulatory approval.

As our business grows, the amount of capital we are required to maintain to satisfy our risk-based capital requirements will also increase, though risk-based capital requirements also take our overall rate of growth into consideration.

Recently, our other business segment growth has slowed and, currently, we expect that to continue, which would reduce capital requirements.

APIC maintained $245.5 million and $199.6 million of capital surplus as of December 31, 2024 and 2023, respectively.

In July 2024, APIC distributed an ordinary dividend of $ 4.2 million to Trupanion, Inc.

ZPIC Insurance Company ("ZPIC"), QPIC Insurance Company ("QPIC"), and GPIC Insurance Company ("GPIC")

In 2021, we established two new wholly-owned U.S.

insurance subsidiaries, ZPIC and QPIC, domiciled in Missouri and Nebraska, respectively, and in 2022 we established a new wholly-owned insurance subsidiary, GPIC, domiciled in Canada.

We formed these insurance subsidiaries to provide us flexibility as to the insurance entity we use to market and write policies.

We have funded the required statutory capital to each of these new subsidiaries.

Due to anticipated lack of use, during the year ended December 31, 2024, we fully dissolved QPIC, which included a distribution of $ 7.0 million of previously required capital to Trupanion, Inc.

APIC, our wholly-owned insurance subsidiary domiciled in New York, underwrites all of our policies in the U.S.

As our business in the U.S.

grows, the amount of capital we are required to maintain to satisfy our risk-based capital requirements will also increase, though risk-based capital requirements also take our overall rate of growth into consideration.

Recently, our other business segment growth has slowed and, we currently expect that to continue, which would reduce capital requirements.

In May 2025 and February 2026, APIC distributed extraordinary dividends of $26.0 million and $14.9 million to Trupanion, Inc, respectively.

APIC's primary regulator is the New York Department of Financial Services ("NY DFS").

ZPIC Insurance Company ("ZPIC")

ZPIC, our wholly-owned insurance subsidiary domiciled in Missouri, has not yet begun underwriting activity, but we have funded its required statutory capital.

We formed this insurance subsidiary to provide us flexibility as to the insurance entity we use to market and write policies in the United States.

ZPIC's primary regulator is the Missouri Department of Commerce and Insurance ("MODCI").

GPIC Insurance Company ("GPIC")

GPIC, our wholly-owned insurance subsidiary domiciled in Canada underwrites the majority of our policies in Canada.

We are continuing to transition the remaining portion of our insurance activity in Canada to GPIC from a fronting arrangement with Accelerant Insurance Company of Canada (formerly Omega General Insurance Company) ("Accelerant").

Pursuant to the Canadian Office of the Superintendent of Financial Institutions ("OSFI") regulations, we have contributed CAD $29.5 million to GPIC as the required statutory capital for this subsidiary.

The capital we maintain at GPIC is, and may continue to be for the foreseeable future, more than the amount that we historically held subject to our fronting arrangement with Accelerant.

Under the terms of our agreements with Accelerant, we retain any financial risk associated with our Canadian business, Accelerant's Canadian insurance operations are supervised and regulated by Canadian federal, provincial and territorial governments and Accelerant is a fully licensed insurer in all of the Canadian provinces and territories in which we do business.

As we transition more of the business to GPIC, the amount we are required to fund in the Canadian trust account will be reduced.

As of December 31, 2025, the account held CAD $8.7 million.

Wyndham Insurance Company (SAC) Limited ("WICL") Segregated Account AX, Wyndham Insurance Company (SAC) Limited Segregated Account Trupanion Germany, and Wyndham Insurance Company (SAC) Limited Segregated Account Trupanion Switzerland

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WICL Segregated Account AX was established by WICL, with Trupanion, Inc.

as the shareholder, to enter into a reinsurance agreement with Accelerant Insurance Company of Canada, formerly known as Omega General Insurance Company.

as the shareholder, to enter into a reinsurance agreement with Accelerant for our business activity in Canada.

All of the assets and liabilities of WICL Segregated Account AX are legally segregated from other assets and liabilities within WICL, and all shares of the segregated account are owned by Trupanion, Inc.

In April 2024, our parent company received a dividend of $ 8.6 million from WICL Segregated Account AX as permitted under our agreements with WICL.

As required by the Office of the Superintendent of Financial Institutions regulations related to our reinsurance agreement with Accelerant Insurance Company of Canada, we are required to maintain a Canadian Trust account with the greater of CAD $ 2.0 million or 120 % of unearned Canadian premium plus 20 % of outstanding Canadian claims, including all incurred but not reported claims.

As of December 31, 2024, the account held CAD $ 19.9 million.

Trupanion, Inc.

received dividends of $15.6 million, $7.0 million, and $5.3 million from WICL Segregated Account AX in March, July, and November 2025, respectively, as permitted under our agreements with WICL.

As required by OSFI regulations related to our reinsurance agreement with Accelerant, we are required to maintain a Canadian Reinsurance Trust account with the greater of CAD $2.0 million or 120% of unearned Canadian premium plus 20% of outstanding Canadian claims, including all incurred but not reported claims.

As of December 31, 2025, the account held CAD $8.7 million which we expect will continue to decrease as we rollover our Canadian book of business to GPIC.

WICL Segregated Account Trupanion Germany and WICL Segregated Account Trupanion Switzerland were established in the third quarter of 2024 by WICL, with Trupanion, Inc.

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We enter into long-term contractual obligations and commitments in the normal course of business, consisting primarily of debt obligations and non-cancellable vendor service agreements.

In March 2022, we entered into a credit agreement that provides us with up to $150.0 million of credit, including a $60.0 million initial term loan that was funded at closing and an aggregate $75.0 million of delayed draw term loans funded between December 2022 and September 2023.

Refer to Note 10, Debt, included in Item 8 of Part II of this report, for further details, including interest and future principal repayments.

In November 2025, we entered into the PNC Agreement, which provides up to $ 120.0 million of credit, including $ 100.0 million term loan and $ 20.0 million revolving loan facility.

We used the proceeds under the PNC Agreement to repay all amounts due and outstanding under our Prior Credit Facility.

Agreement will require us to repay the underlying obligations over a three-year term at SOFR plus a margin.

Refer to Note 11, Debt, included in Item 8 of Part II of this report for further details regarding the credit agreements, including interest and future principal repayments.

Critical Accounting Policies and Significant Estimates

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• the time elapsed between the date of loss and the date of payment,

• the members chosen deductible,

• the appropriate segmentation between product lines or claim processing method, and

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Our reserve estimate for these expenses was $51.6 million as of December 31, 2024.

As of December 31, 2024, we had unfavorable development on veterinary invoice reserves of $0.8 million for the year ended December 31, 2023.

As of December 31, 2025, we had a favorable development on veterinary invoice reserves of $2.5 million for the year ended December 31, 2024.

Refer to Note 9, Reserve for Veterinary Invoices, in Item 8 of Part II of this report, for further details.

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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-K

Item 5. Market for Registrant’s Common Equity