What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-13 compared with 2025-02-27 · 328 added, 183 removed, 761 unchanged (40% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income ( Loss )

Consolidated Balance Sheets

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We have audited the accompanying consolidated balance sheets of Trupanion, Inc.

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S.

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The Company’s reserve for veterinary invoices is based on an actuarial analysis of observed claim settlement patterns including, but not limited to, the number of veterinary invoices the Company expects to receive, the average cost of those veterinary invoices, the time elapsed between the date of loss and the date of payment, the appropriate segmentation between product lines or claim processing method, and the expected cost to process and administer claim payments.

Auditing the Company’s reserve for veterinary invoices was complex and required the involvement of our actuarial specialists due to the sensitivity of the estimated reserve to management’s assumptions.

Auditing the Company’s reserve for veterinary invoices is complex and required the involvement of our actuarial specialists due to the sensitivity of the estimated reserve to management’s assumptions.

Estimating the ultimate cost to settle the reserve for veterinary invoices is subjective due to the possibility that the actual veterinary invoice payments may not be comparable to historical trends experienced by the Company.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the process for estimating the reserve for veterinary invoices.

For example, we tested management review controls over the review and approval of methods and assumptions used in estimating the reserve for veterinary invoices.

This included, among other procedures, understanding management review controls in place over the review and approval of methods and assumptions used in estimating the reserve for veterinary invoices.

To test the reserve for veterinary invoices, our audit procedures included, among others, testing the completeness and accuracy of the data used in the actuarial analyses by testing reconciliations of the underlying historical veterinary paid invoice data recorded in the source systems to the Company’s actuarial analyses, and comparing a sample of paid veterinary invoices to source documentation.

With the assistance of EY actuarial specialists, we evaluated the appropriateness of the actuarial methods and assumptions used to estimate veterinary invoice reserves by comparing such methods and assumptions to our expectations of those used for the specific type of insurance, current and historical invoice payment patterns.

With the assistance of EY actuarial specialists, we evaluated the appropriateness of the actuarial methods and assumptions used to estimate the reserve for veterinary invoices by comparing such methods and assumptions to our expectations of those used for the specific type of insurance, current and historical invoice payment patterns, and any operational or external changes affecting claim payments.

We also compared management’s recorded reserves to a range of reasonable reserve estimates calculated independently by our EY actuarial specialists.

Additionally, we performed a hindsight analysis of the prior period estimates of the reserve for veterinary invoices using subsequent claims development.

Additionally, we performed a hindsight analysis of the prior period estimates using subsequent claims development.

/s/ Ernst & Young LLP

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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 loss per share:

Basic and diluted $ ( 0.23 ) $ ( 1.08 ) $ ( 1.10 )

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

Net income (loss) per share:

Basic $ 0.45 $ ( 0.23 ) $ ( 1.08 )

Diluted $ 0.45 $ ( 0.23 ) $ ( 1.08 )

Weighted average shares of common stock outstanding:

Basic and diluted 42,158,773 41,436,882 40,765,355

Basic 42,958,654 42,158,773 41,436,882

Diluted 43,555,884 42,158,773 41,436,882

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

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Trupanion, Inc.

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

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2025 2024 2023

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

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

Other comprehensive income (loss):

Foreign currency translation adjustments 3,833 ( 3,037 ) 2,712

Net unrealized gain (loss) on available-for-sale debt securities 22 3,992 ( 4,966 )

Net unrealized gain on available-for-sale debt securities 876 22 3,992

Other comprehensive income (loss), net of taxes 4,709 ( 3,015 ) 6,704

Comprehensive loss $ ( 12,648 ) $ ( 37,989 ) $ ( 54,050 )

Comprehensive income (loss) $ 24,142 $ ( 12,648 ) $ ( 37,989 )

Trupanion, Inc.

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(in thousands, except share amounts)

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

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

Shares Amount

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Stock-based compensation expense — — 35,296 — — — 35,296

Repurchases of common stock ( 95,021 ) — — — — ( 5,755 ) ( 5,755 )

Other comprehensive income (loss) — — — — ( 9,378 ) — ( 9,378 )

Other comprehensive income — — — 6,704 — — 6,704

Net loss — — — — ( 44,693 ) — ( 44,693 )

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Stock-based compensation expense — — 33,937 — — — 33,937

Repurchases of common stock — — — — — — —

Other comprehensive income (loss) — — — — 6,704 — 6,704

Other comprehensive loss — — — ( 3,015 ) — — ( 3,015 )

Net loss — — — — ( 9,633 ) — ( 9,633 )

2 unchanged sentences

Stock-based compensation expense — — 38,541 — — — 38,541

Other comprehensive income (loss) — — — — ( 3,015 ) — ( 3,015 )

Net loss — — — ( 9,633 ) — — ( 9,633 )

Other comprehensive income — — — 4,709 — — 4,709

Net income — — — — 19,433 — 19,433

Balance at December 31, 2025 43,402,081 $ — $ 604,828 $ 2,097 $ ( 206,455 ) $ ( 16,534 ) $ 383,936

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Operating activities

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

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

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

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

Depreciation and amortization 15,836 16,466 12,474

Stock-based compensation expense 38,312 33,432 33,161

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

Goodwill impairment charges 1,129 5,299 —

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Deferred revenue 18,679 17,199 32,567

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

Investing activities

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Maturities and sales of investment securities 172,609 127,653 190,270

Cash paid in business acquisition, net of cash acquired — — ( 15,034 )

Purchases of property, equipment, and internal-use software ( 14,129 ) ( 9,716 ) ( 18,280 )

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Repayment of debt financing ( 134,438 ) ( 1,350 ) ( 1,717 )

Repurchases of common stock — — ( 5,755 )

Proceeds from exercise of stock options 1,694 752 2,655

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Supplemental disclosures

Income taxes paid $ 546 $ 611 $ 2,498

Interest paid $ 13,085 $ 13,191 $ 12,100

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Purchases of property, equipment, and internal-use software included in accounts payable and accrued liabilities 129 534 887

Right-of-use asset obtained in exchange for lease liability 14,452 — —

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

Trupanion, Inc.

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Trupanion, Inc.

(collectively with its wholly-owned subsidiaries, the "Company") provides 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.

(collectively with its wholly-owned subsidiaries, the "Company") provides medical insurance for cats and dogs in the United States, Canada, and certain countries in Continental Europe.

Through its data-driven, vertically-integrated approach, the Company develops and offers high-value medical insurance products, priced to take into account each pet's unique characteristics and coverage level.

Basis of Presentation

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All intercompany accounts and transactions have been eliminated in consolidation.

Certain immaterial prior year amounts have been reclassified to conform with the current year's presentation.

These reclassifications had no impact on net earnings, total assets, total liabilities, total shareholders' equity, or cash flows.

Use of Estimates

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The Company had $ 281.9 million and $ 252.0 million accounts receivable associated with underwriting these policies as of December 31, 2025 and 2024, respectively.

During the year ended December 31, 2023, the Company incurred a non-recurring $ 3.8 million settlement of accounts receivable due to uncollected premiums in connection with the transition of underwriting a third-party business to other insurers.

Deferred Acquisition Costs

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Held-to-maturity securities are reported at amortized cost.

Premiums or discounts on fixed maturity securities are amortized or accreted over the life of the security and included in interest income.

There were $ 0.4 million in realized gains and $ 0.3 million in realized losses on sales of fixed maturity securities during the year ended December 31, 2024, $ 0.3 million in realized gains and $ 0.9 million in realized losses on sales of fixed maturity securities during the year ended December 31, 2023, and no realized gains or losses on sales of fixed maturity securities during the years ended December 31, 2022.

Premiums or discounts on fixed maturity securities are amortized or accreted over the life of the security and included as interest income within Other (income), net.

There were $ 1.0 million in realized gains and $ 0.1 million in realized losses on sales of fixed maturity securities during the year ended December 31, 2025, $ 0.4 million in realized gains and $ 0.3 million in realized losses on sales of fixed maturity securities during the year ended December 31, 2024, and $ 0.3 million in realized gains and $ 0.9 million in realized losses on sales of fixed maturity securities during the years ended December 31, 2023.

Each reporting period, the Company evaluates whether declines in fair value of its investments below carrying value are the result of expected credit losses.

This evaluation includes the Company's ability and intent to hold these investments until recovery of carrying value occurs, including an evaluation of all available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable forecasts.

Expected credit losses are recorded as an allowance through other expense (income), net on the Company's consolidated statements of operations.

Expected credit losses are recorded as an allowance through other (income), net within the Company's consolidated statements of operations.

Fair Value of Financial Instruments

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Property, Equipment, and Internal-Use Software

Property, equipment, and internal-use software primarily consists of building, land and land improvements, office equipment, internal-use software related to the Company’s website, and internal support systems.

Property, equipment, and internal-use software primarily consists of building, land and land improvements, office equipment, and internal-use software related to the Company’s website and internal support systems.

Internal-use software is capitalized during the application development stage of the project.

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Acquired finite-lived intangibles are amortized on a straight-line basis over the estimated useful lives of the assets.

The Company recognized impairment charges on goodwill totaling $ 5.2 million during the year ended December 31, 2024, and no goodwill impairment charges in the years ended December 31, 2023 and 2022.

The Company recognized impairment charges on goodwill totaling $1.1 million and $5.3 million during the years ended December 31, 2025 and 2024, respectively, and no goodwill impairment charges during the year ended December 31, 2023.

The Company recognized no impairment on indefinite-lived intangible assets during the years ended December 31, 2025, 2024, and 2023.

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Should an impairment exist, the impairment loss would be measured as the amount the asset's carrying value exceeds its fair value.

The Company has recognized no impairment loss on long-lived assets, including property, equipment, internal-use software, and finite-lived intangible assets for the years ended December 31, 2024, 2023, and 2022.

The Company recognized no impairment losses on long-lived assets, including property, equipment, internal-use software, and finite-lived intangible assets for the years ended December 31, 2025, 2024, and 2023.

Reserve for Veterinary Invoices

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

To determine the accrual, the Company makes assumptions based on its historical experience, including the number of veterinary invoices it expects to receive, the average cost of those veterinary invoices, the length of time between the date of the veterinary invoice and the date the Company receives it, the member's chosen deductible, and the Company's expected cost to process and administer the payments.

To determine the accrual, the Company makes assumptions based on its historical experience, including the number of veterinary invoices we expect to receive, the average cost of those veterinary invoices, the time elapsed between the date of loss and the date of payment, the member's chosen deductible, and the Company's expected cost to process and administer the payments.

As of each balance sheet date, the Company reevaluates its reserve and adjusts the estimate for new information.

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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 renewal fees, credit card transaction fees and premium tax expenses.

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

Other cost of revenue for the other business segment includes the commissions the Company pays to unaffiliated general agents and costs to administer the programs in the other business segment.

Technology and Development

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

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

Technology and development expenses primarily consist of personnel costs and related expenses for the Company's 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..

General and Administrative

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New Pet Acquisition Expense

New pet acquisition expense primarily consists of costs, including employee compensation, 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.

Other Expense (Income), Net

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.

Other (Income), Net

Other (income), net, totaled $ 21.9 million, $ 14.4 million, and $ 7.7 million, including interest income of $ 12.3 million, $ 12.4 million, and $ 9.0 million for the years ended December 31, 2025, 2024, and 2023.

In 2023 other income was offset by a credit loss of $ 1.7 million related to the Company's preferred stock investment (refer to Note 6, Other Investments).

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

Refer to Note 6, Other Investments, for more information on amounts recorded to Other (income), net in relation to the Company's preferred stock investment in Baystride, Inc.

Advertising costs are expensed as incurred.

Advertising costs amounted to $ 23.8 million, $ 13.3 million and $ 16.9 million, in the years ended December 31, 2025, 2024 and 2023, respectively.

The Company records advertising costs within New pet acquisition expense.

Stock-Based Compensation

Compensation expense related to stock-based transactions, including employee and non-employee stock option awards, restricted stock awards, and restricted stock units, is measured and recognized in the financial statements based on fair value.

The fair value of restricted stock awards and restricted stock units is the common stock price as of the measurement date.

Compensation expense related to stock-based transactions, including employee and non-employee restricted stock units, is measured and recognized in the financial statements based on fair value.

The fair value of restricted stock units is the common stock price as of the measurement date.

Stock-based compensation expense for stock options and restricted stock units is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award.

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Penalties and interest are classified as a component of income taxes.

Foreign Currency Translation

F oreign Currency Translation

The Company’s consolidated financial statements are reported in U.S.

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dollars using a weighted average rate for the relevant reporting period.

Cumulative translation adjustments of $( 3.1 ) million, $( 0.1 ) million, and $( 2.8 ) million were recorded in accumulated other comprehensive loss (income) as of December 31, 2024, 2023, and 2022, respectively.

Reclassifications

Certain presentation reclassifications have been made to prior-year deferred tax amounts disclosed within Note 16 of these financial statements to conform to current-year reporting classifications.

These reclassifications had no impact on net earnings, total assets, total liabilities, total shareholders' equity, or cash flows.

Cumulative translation adjustments of $ 0.7 million, $( 3.1 ) million, and $( 0.1 ) million were recorded in accumulated other comprehensive income (loss) as of December 31, 2025, 2024, and 2023, respectively.

The Company, at the inception of a contract, determines whether a contract is or contains a lease.

The Company records right-of-use ("ROU") assets and lease obligations for its operating leases which are initially recognized based on the discounted future lease payments over the term of the lease.

The Company records right-of-use assets within Other Long-Term Assets and lease obligations within Other Liabilities.

If the rate implicit in the Company's leases is not readily determinable, the Company's applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments.

Lease term is defined as the non-cancellable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less.

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 6 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 (loss) on a specific identification basis.

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 14, Accumulated Comprehensive Income (Loss)

Insurance Operations

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Dividends are allowed subject to the Segregated Accounts Company Act of 2000, which allows for dividends only to the extent that the entity remains solvent and the value of its assets remain greater than the aggregate of its liabilities and its issued share capital and share premium accounts.

For the Company’s Canadian business, all plans are written by Accelerant and the risk is assumed by the Company through a fronting and reinsurance agreement.

A portion of the Company's business in Canada is written by Accelerant and the risk is assumed by the Company through a fronting and reinsurance agreement.

Premiums are recognized and earned pro rata over the terms of the related customer contracts.

Revenue recognized from the agreement in 2024, 2023, and 2022 was $ 206.7 million, $ 167.6 million and $ 135.9 million, respectively, and deferred revenue relating to this arrangement at December 31, 2024 and 2023 was $ 11.3 million and $ 9.5 million, respectively.

Revenue recognized under this agreement in 2025, 2024, and 2023 was $ 127.2 million, $ 206.7 million and $ 167.6 million, respectively, and deferred revenue relating to this arrangement at December 31, 2025 and 2024 was $ 1.3 million and $ 11.3 million, respectively.

Reinsurance revenue was 9 %, 16 %, and 15 % of total revenue in 2025, 2024, and 2023, respectively.

Cash designated for the purpose of paying claims related to this reinsurance agreement was $ 5.9 million and $ 7.2 million at December 31, 2025 and 2024, respectively.

In addition, as required by the Office of the Superintendent of Financial Institutions regulations related to the Company’s reinsurance agreement with Accelerant, the Company is required to fund 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.

In addition, as required by the Canadian Office of the Superintendent of Financial Institutions regulations related to the Company’s reinsurance agreement with Accelerant, the Company is required to fund 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, 2025, the account balance was CAD $8.7 million and the Company was in compliance with all requirements.

During 2025, the Company began directly underwriting a material portion of its Canadian business through its wholly-owned insurance subsidiary, GPIC.

The Company has not transferred any risk to third-party reinsurers.

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Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07 related to improving segment disclosures.

This ASU enhances disclosures about significant segment expenses, allows for multiple measures of a segment's profit or loss, and requires additional disclosures about the Chief Operating Decision Maker.

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 Company adopted ASU 2023-09 for the fiscal year ended December 31, 2025.

In December 2023, the FASB issued ASU 2023-09 which improves and expands upon the income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

The ASU is effective for annual periods beginning after December 15, 2024, including interim periods within that reporting period, with early adoption permitted.

As of year-end, the Company is still evaluating the impact on its consolidated financial statements.

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

Refer to the Company's updated annual income tax disclosures in Note 17, Income Taxes.

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.

As of year-end, the Company is still evaluating the impact 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.

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

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:

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

In September 2025, the FASB issued ASU 2025-06, which modernizes the accounting for software costs that are accounted for under Subtopic 350-40, Intangibles-Goodwill and Other-Internal-Use Software.

The ASU is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

The Company is currently evaluating the impact of adopting ASU 2025-06.

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):

As of December 31,

2025 2024 2023

Basic earnings per share:

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

Shares used in computation:

Weighted average shares of common stock outstanding 42,958,654 42,158,773 41,436,882

Basic earnings per share $ 0.45 $ ( 0.23 ) $ ( 1.08 )

Diluted earnings per share:

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

Shares used in computation:

Weighted average shares of common stock outstanding 42,958,654 42,158,773 41,436,882

Stock options 233,377 — —

Restricted stock units 363,853 — —

Weighted average number of shares 43,555,884 42,158,773 41,436,882

Diluted earnings per share $ 0.45 $ ( 0.23 ) $ ( 1.08 )

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:

Year Ended December 31,

2025 2024 2023

Stock options — 347,334 408,970

Restricted stock units 1,129,314 970,739 714,382

Property, Equipment, and Internal-Use Software, Net

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Accumulated depreciation ( 58,943 ) ( 49,640 )

Property and equipment, net $ 102,191 $ 103,650

Property, equipment, and internal-use software, net $ 104,844 $ 102,191

Depreciation expense related to property, equipment, and internal-use software was $ 11.2 million, $ 11.2 million and $ 6.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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Estimates of fair value are based on the best information available to the Company as of the assessment date.

The Company has identified reporting units in conjunction with its annual goodwill impairment testing date during the fourth quarter of 2024.

All of the Company’s goodwill has been assigned to three separate reporting units within our Subscription Business reportable segment:

Trupanion Core – North America, Smart Paws, and PetExpert.

As of December 31, 2025, all of the Company's goodwill has been assigned to two reporting units within our Subscription Business operating segment:

Trupanion Core - North America and PetExpert.

The following is a summary of goodwill by reportable segment for the years ended December 31, 2025 and 2024 (in thousands):

Subscription Business Other Business Total

Subscription Business

Balance as of January 1, 2024 $ 43,713

Impairment charges ( 5,229 )

Effects of foreign currency ( 1,513 )

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Balance as of December 31, 2025 $ 39,382

As of December 31, 2025 and 2024, goodwill consisted of the following (in thousands):

Goodwill, gross $ 45,740 $ 42,200

Accumulated impairment losses ( 6,358 ) ( 5,229 )

Goodwill, net $ 39,382 $ 36,971

In the fourth quarter of 2025, the Company performed its annual goodwill impairment test for both reporting units with assigned goodwill and recognized impairment charges of $1.1 million on the goodwill of PetExpert, based on the fair value assessments performed after circumstances indicated that the goodwill of this reporting unit more likely than not had become impaired.

These circumstances primarily related to the Company’s decision to slow expansion efforts as the Company focuses capital allocation on reporting units operating within the Company's stated financial guardrails.

In the fourth quarter of 2024, the Company performed its annual goodwill impairment test for all three reporting units with assigned goodwill and recognized impairment charges of $2.7 million and $2.5 million on the goodwill of Smart Paws and PetExpert, respectively, based on the fair value assessments performed after circumstances indicated that the goodwill of these reporting units more likely than not had become impaired.

Following these impairment charges, no goodwill remains for Smart Paws and $6.7 million of goodwill remains for PetExpert, which could be further impaired in the future if this reporting unit fails to meet its revised financial projections.

Following the impairment charges taken in 2024 and 2025, no goodwill remains for Smart Paws and $6.8 million of goodwill remains for PetExpert, which could be further impaired in the future if this reporting unit fails to meet its revised financial projections.

The Company determined that the Trupanion Core – North America reporting unit was not at risk of goodwill impairment as of December 31, 2025 and 2024.

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Licenses $ 4,773 $ — $ 4,773

Leases 848 ( 848 ) —

Trade name 1,271 ( 531 ) 740

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Total Intangibles $ 33,615 $ ( 20,438 ) $ 13,177

(1) Does not include intangible assets not yet placed in service.

The Company acquired an insurance company in 2007, which originally included licenses in 23 states.

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Insurance licenses are considered an indefinite-lived intangible asset given the planned renewal of the certificates of authority and applicable licenses for the foreseeable future.

Additionally, as detailed in Note 6, Other Investments, during 2025 the Company acquired intellectual property developed by Baystride, Inc., valued at $ 14.8 million on the acquisition date.

This cost will be amortized over the intellectual property's estimated useful lives of 20 years once the patent is approved.

Amortization expense associated with intangible assets was $ 4.6 million, $ 5.3 million, and $ 5.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.

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Year ending December 31 (1) :

Amortization Expense

Thereafter 136

Total $ 3,696

(1) Does not include intangible assets not yet placed in service.

Available-for sale securities are classified as short-term versus long-term investments based on whether they represent the investment of funds available for current operations.

All available-for-sale securities are considered short-term in nature, with the exception of certain long-term investments that are being held for statutory requirements.

Currently, all available-for-sale securities are considered short-term in nature.

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

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treasury securities $ 9,757 $ 10 $ — $ 9,767

Foreign Treasury Securities 18,263 — — 18,263

Certificates of deposit 4,169 — — 4,169

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Long-term investments:

Available-for-sale investments

Foreign deposits $ 11,869 $ — $ — $ 11,869

$ 11,869 $ — $ — $ 11,869

Held-to-maturity investments

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$ 12,623 $ 16 $ ( 1 ) $ 12,638

Maturities of investments classified as available-for-sale and held-to-maturity were as follows (in thousands):

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

December 31, 2025

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Due after one year through five years 150,949 151,988

Due after five years through ten years — —

Due after ten years — —

$ 150,954 $ 151,993

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Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses

As of December 31, 2024

December 31, 2025

treasury securities $ 5,139 $ ( 8 ) $ — $ — $ 5,139 $ ( 8 )

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Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses

As of December 31, 2023

December 31, 2024

treasury securities $ 27,769 $ ( 202 ) $ — $ — $ 27,769 $ ( 202 )

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Total $ 35,954 $ ( 263 ) $ 3,832 $ ( 50 ) $ 39,786 $ ( 313 )

As of December 31, 2025, 14 of the securities held were in an unrealized loss position.

Unrealized losses on available-for-sale investments relate to interest rate changes.

The Company does not expect any 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 does not expect any 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 $ 77.1 million and $ 114.7 million during the years ended December 31, 2024 and 2023, respectively.

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.

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 maturity investments classified as available-for-sale were $ 141.7 million and $ 77.1 million during the years ended December 31, 2025 and 2024, respectively.

Other Investments

Preferred Stock Investment

The Company has invested $ 7.0 million in the preferred stock of a variable interest entity, Baystride, Inc., 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 7.

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

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 $ 1.6 million and $ 4.0 million as of December 31, 2024 and 2023, respectively.

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

The Company provided $ 0.3 million and $ 0.4 million of these services for the years ended December 31, 2024 and 2023, respectively.

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 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 7.

On June 3, 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 had extended a $ 7.0 million revolving line of credit to Baystride to fund its inventory purchases.

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

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

The outstanding loan balance under the line of credit, including accrued interest, was paid in full and extinguished in July 2025 and was $ 1.6 million as of December 31, 2024.

Allowance for Credit Losses

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

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

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

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.

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

Recovery of (addition to) allowance for credit losses 1,674 ( 1,674 )

Balance at end of 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.

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 in 2025 prior to the exchange of the investment for intellectual property.

Investment in Joint Venture

In September 2018, the Company acquired a non-controlling equity interest in a joint venture in Australia, whereby it has committed to licensing certain intellectual property and contributing up to $ 2.2 million AUD upon the achievement of specific operational milestones over a period of at least four years from the agreement execution date.

As of December 31, 2024, the Company has contributed $ 1.5 million AUD.

This equity investment is accounted for using the equity method and is classified in other long-term assets on the Company's consolidated balance sheet.

The Company's share of income and losses from this equity method investment is included in gain (loss) from investment in joint venture on its consolidated statement of operations.

Also included in this line item are income and expenses associated with administrative services provided to the joint venture.

In September 2018, the Company acquired a non-controlling equity interest in a joint venture in Australia, whereby it had committed to licensing certain intellectual property and contributing up to $ 2.2 million AUD upon the achievement of specific operational milestones over a period of at least four years from the agreement execution date.

As of December 31, 2024, the Company had contributed $ 1.5 million AUD.

This equity investment was accounted for using the equity method and was classified in other long-term assets on the Company's consolidated balance sheet.

The Company's share of income and losses from this equity method investment were included in gain (loss) from investment in joint venture on its consolidated statement of operations.

Also included in this line item were income and expenses associated with administrative services provided to the joint venture.

In March 2025, the Company restructured this relationship from a joint venture to a brand licenses and services agreement.

Fair Value Disclosures

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Treasury securities 104,158 — 104,158 —

Preferred stock investment 7,916 — — 7,916

Total $ 247,335 $ 46,818 $ 200,517 $ —

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Corporate bonds 35,623 — 35,623 —

Foreign deposits 11,869 11,869 — —

Treasury securities 70,291 — 70,291 —

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Total $ 233,916 $ 91,534 $ 134,466 $ 7,916

The Company measures the fair value of money market funds and foreign deposits, classified as Level 1, based on quoted prices in active markets for identical assets.

The Company's fixed maturity investments classified as either Level 1 or Level 2 in the above tables are priced exclusively by external sources, including pricing vendors, dealers/market makers, and exchange-quoted prices.

The fair value of the Company's fixed maturity investments classified as Level 2 is based on either recent trades in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

Held-to-maturity investments are carried at amortized cost and the fair value and changes in unrealized gains (losses) are disclosed in Note 5, Investments.

The Company measures the fair value of money market funds, classified as Level 1, based on quoted prices in active markets for identical assets.

The fair values of the Company's fixed maturity investments classified as Level 2 are based on either recent trades in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

Held-to-maturity investments are carried at amortized cost and the fair value and changes in unrealized gains and losses are disclosed in Note 5, Investments.

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 6) 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.

An increase or decrease in any of these unobservable inputs would result in a change in the fair value measurement.

The estimated fair value was $ 7.9 million and $ 5.3 million as of December 31, 2024 and 2023, respectively, and is recorded in other long-term assets on the Company's consolidated balance sheet.

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 years ended December 31, 2025 and 2024.

The following table presents the change in fair value of the Company’s investment carried at fair value and classified as Level 3 as of December 31, 2024 (in thousands):

The Company's preferred stock investment (see Note 6) 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 derived by discounted cash flow and market valuation techniques which utilized 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):

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

Unrealized gain included in other comprehensive income (loss) — 916

Reversal of cumulative unrealized loss included in other comprehensive income (loss) — 2,885

Recovery of (increase in) credit loss included in earnings 1,674 ( 1,674 )

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

Recovery of credit loss included in earnings — 1,674

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

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

Balance at end of period $ — $ 7,916

Fair Value Disclosures - Other Assets and Liabilities

The Company's other long-term assets balance also included notes receivable of $ 4.3 million and $ 6.8 million as of December 31, 2024 and 2023, respectively, recorded at their estimated recoverable amount.

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

The Company's other long-term assets balance also included notes receivable of $ 2.5 million and $ 4.3 million as of December 31, 2025 and 2024, respectively, recorded at their estimated collectible amount.

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

The estimated fair value represents a Level 3 measurement within the fair value hierarchy and is based on market interest rates and the assessed creditworthiness of the third party.

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Legal Proceedings

From time to time the Company is or may become subject to various legal proceedings arising in the ordinary course of business, including proceedings against members, other entities or regulatory bodies.

From time to time the Company is or may become subject to various legal proceedings arising in the ordinary course of business, including proceedings involving members, other entities or regulatory bodies.

Estimated liabilities are recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

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Reserve for Veterinary Invoices

The reserve for veterinary invoices is an estimate of the future amount the Company will pay for veterinary claims that have not been paid prior to the reporting date.

The reserve for veterinary invoices is an estimate of the future amount the Company will pay for insurance claims that have not been paid prior to the reporting date.

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.

The reserve is made for each of the Company's segments, subscription and other business, and is continually refined as the Company receives and pays veterinary invoices.

Changes in management's assumptions and estimates may have a relatively large impact to the reserve and associated expense.

Changes in management's assumptions and estimates may have a relatively large impact on the reserve and associated expense.

Reserve for veterinary invoices

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Reserve at end of period $ 26,364 $ 23,084 $ 31,548

The Company had unfavorable development on veterinary invoice reserves of $ 0.5 million for the year ended December 31, 2024, including favorable development of $ 1.2 million attributable to accident year 2023 and unfavorable development of $ 1.7 million attributable to accident year 2022 and prior.

The favorable development for accident year 2023 was primarily driven by faster reporting patterns of claims than initially anticipated.

The unfavorable development for accident year 2022 and prior was driven by higher than expected frequency of claims.

The Company had unfavorable development on veterinary invoice reserves of $ 3.3 million for the year ended December 31, 2025, including unfavorable development of $ 1.1 million attributable to accident year 2024 and unfavorable development of $ 2.2 million attributable to accident year 2023 and prior.

The unfavorable development for accident years 2024 and 2023 was primarily driven by higher than expected frequency of claims.

Non-cash expenses are primarily comprised of stock-based compensation for employees performing claims processing related duties.

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Total paid 327,815 327,859 278,360

Non-cash expenses — — —

Reserve at end of period $ 29,557 $ 28,551 $ 31,690

The Company had favorable development on veterinary invoice reserves for the other business segment of $ 5.8 million for the year ended December 31, 2025, including favorable development on veterinary invoice reserves of $ 5.6 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 2023 and 2022 was driven by faster paid loss development factors than originally estimated for Pets Best, as well as the estimated impact of the roll-off of a portion of the business.

The favorable development for accident year 2024 was driven by lower than expected frequency and to a lesser extent, lower than expected severity in the fourth quarter of 2024.

Reserve for veterinary invoices, by year of occurrence

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Total amounts unpaid and recorded as a liability $ 29,557

On March 25, 2022 , the Company entered into a credit agreement with Piper Sandler Finance, LLC, acting as the administrative agent, that provides the Company with $ 150.0 million in credit (the Credit Facility) consisting of:

(a) an initial term loan in an aggregate principal amount of $ 60.0 million (Initial Term Loan), which was funded at closing;

(b) commitments for delayed draw term loans in an aggregate principal amount not in excess of $ 75.0 million (Delayed Draw Term Loans, and together with the Initial Term Loan, the Term Loans), which may be drawn from time to time until September 25, 2023 .

On December 29, 2022, February 17, 2023, and September 21, 2023, the Company borrowed Delayed Draw Term loans of $ 15.0 million, $ 35.0 million, and $ 25.0 million, respectively;

(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 .

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

The stated interest rate as of December 31, 2024 was approximately 9.5 % for the original $ 60.0 million term loan and for the aggregate $75.0 million 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.

The Credit Facility is secured by substantially all assets of the Company and its subsidiaries.

Proceeds from the Credit Facility may be used for permitted acquisitions and investments, working capital and other general corporate purposes.

The Credit Agreement contains financial and other covenants .

The Company leases certain office space and buildings from third parties and recognizes lease expense on a straight-line basis over the lease term.

During the year ended December 31, 2025, we entered into a lease for a building to use as a manufacturing facility for our pet food initiative.

The tables below present information regarding the Company's lease assets and liabilities (in thousands):

As of December 31,

Operating lease right-of-use assets $ 14,688 $ 362

Total lease assets 14,688 362

Operating lease liabilities 767 —

Operating lease liabilities 13,397 362

Total lease liabilities $ 14,164 $ 362

The Company's lease costs recognized in the Consolidated Statements of Operations consist of the following (in thousands):

Year ended December 31,

2025 2024 2023

Operating lease cost $ 454 $ 87 $ 151

Total lease costs $ 454 $ 87 $ 151

Other lease information is as follows:

Year ended December 31,

Weighted-average remaining lease term - operating leases 9.9 8.5

Weighted-average discount rate - operating leases 7.66 % 10.38 %

The following table summarizes the Company's future minimum lease payments during the next five fiscal years and thereafter (in thousands):

Year Ending December 31, Operating Leases

Thereafter 14,449

Total undiscounted lease obligations $ 21,953

Imputed interest 7,789

Net lease obligations $ 14,164

Prior Credit Facility

On March 25, 2022 , the Company entered into a credit agreement with Piper Sandler Finance, LLC, acting as the administrative agent, that provided the Company with $ 150.0 million in credit (the "Prior Credit Facility").

The Prior Credit Facility obligated the Company to 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.

In November 2025, the Company repaid the Prior Credit Facility in full utilizing proceeds from its new Credit Facility.

In connection with repayment of the Prior Credit Facility, the Company recognized a loss of $ 1.6 million, recorded within Interest expense, which reflected the portion of debt issuance cost that was unamortized at the time of extinguishment.

On November 4, 2025, the Company entered into a credit agreement with PNC Bank, National Association acting as the administrative agent, that provides the Company with $ 120.0 million in credit (the "PNC Facility") consisting of:

(a) an initial term loan in an aggregate principal amount of $ 100.0 million ("PNC Initial Term Loan"), which was funded at closing;

(b) commitments for revolving loans in an aggregate principal amount at any time outstanding not in excess of $ 20.0 million (PNC Revolving Loans), of which $ 15.0 million was drawn and the rest may be drawn at any time prior to maturity.

The PNC Facility is secured by substantially all assets of the Company and its subsidiaries.

Proceeds from the PNC Facility were utilized to pay off the Prior Credit Facility.

The credit agreement with PNC Bank contains financial and other covenants.

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

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.

To the extent not previously paid, the PNC Facility is due and payable on November 4, 2028.

The Company will make quarterly principal payments of $ 2.5 million on the PNC Initial Term Facility.

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

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 stated interest rate as of December 31, 2025 was approximately 6.42 % fo r the aggregate outstanding term loans.

The Company incurred total debt issuance cost of approximat ely $ 0.8 million, wh ich is reported in the consolidated balance sheet as a direct reduction from the carrying amount of the PNC Facility, and is amortized as interest expense over the term of three years.

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

Year Ending December 31, December 31, 2025

2026 $ 10,000

Total $ 112,500

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Exercised ( 142,572 ) 11.90 3,620

Expired ( 500 ) 14.93 —

Forfeited ( 7,530 ) 9.82 —

Outstanding as of December 31, 2025 197,232 16.20 4,175

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

The Company issues authorized shares upon the exercise of stock options.

Restricted Stock Units

A summary of the Company’s restricted stock unit activity for the years ended December 31, 2024, 2023 and 2022 is as follows:

The following table presents information regarding restricted stock units granted, vested, and forfeited for the years ended December 31, 2025, 2024 and 2023 is as follows:

Shares Weighted Average

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Share Repurchase Program

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 year ended December 31, 2024 and 2023.

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, to be recorded as treasury stock.

The Company repurchased no shares during the years ended December 31, 2025 and 2024.

Accumulated Comprehensive Income (Loss)

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Balance as of January 1, 2023 $ ( 2,788 ) $ ( 3,513 ) $ ( 6,301 )

Other comprehensive income (loss) ( 4,412 ) ( 4,966 ) ( 9,378 )

Other comprehensive income 2,712 3,992 6,704

Balance as of December 31, 2023 $ ( 76 ) $ 479 $ 403

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Balance as of December 31, 2024 $ ( 3,113 ) $ 501 $ ( 2,612 )

Other comprehensive income (loss) ( 3,037 ) 22 ( 3,015 )

Other comprehensive income 3,833 876 4,709

Balance as of December 31, 2025 $ 720 $ 1,377 $ 2,097

In connection with the nonmonetary exchange discussed in Note 6, the Company reclassified $0.9 million of previously unrealized gain from Accumulated other comprehensive income (loss) to Other (income), net during the twelve months ended December 31, 2025.

The Company has two reporting segments:

subscription business and other business.

The subscription business segment consists of aggregated operating segments with products that have been created to meet the needs of their distribution channels and have similar target margin profiles.

This segment generates revenue primarily from subscription payments related to the Company's direct-to-consumer products.

The other business segment generates revenue primarily by underwriting policies on behalf of third parties and has a different margin profile than the Company's subscription business segment.

The subscription business segment generates revenue primarily from subscription payments related to the Company's direct-to-consumer products.

The other business segment generates revenue from other product offerings, primarily by underwriting policies on behalf of third parties with whom the Company has a business-to-business relationship.

The other business segment has, and targets, a lower margin profile than the Company's subscription business segment.

The Company does not undertake marketing efforts for these policies and has a business-to-business relationship with these third-parties.

The Company's chief operating decision maker is our Chief Executive Officer.

The Company's chief operating decision maker is its Chief Executive Officer.

The chief operating decision maker reviews revenue and operating income (loss) to evaluate segment performance.

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The Company does not analyze discrete segment balance sheet information related to long-term assets.

O perating loss of the Company’s segments was as follows (in thousands):

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

Year Ended December 31,

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Depreciation and amortization 10,885 10,970 8,021

Subscription business operating loss ( 1,118 ) ( 35,994 ) ( 39,757 )

Subscription business operating income (loss) 22,473 ( 1,118 ) ( 35,994 )

Other business:

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Other business operating loss ( 8,331 ) ( 8,214 ) ( 4,446 )

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

Total operating loss ( 9,514 ) ( 40,659 ) ( 43,001 )

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

Total 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 )

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

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Dividend Restrictions and Statutory Surplus

The Company’s business operations are conducted through subsidiaries, one of which is an insurance company domiciled in New York, American Pet Insurance Company (APIC), and three of which are segregated cell businesses, Wyndham Segregated Accounts AX, Trupanion Germany, and Trupanion Switzerland, located in Bermuda.

In 2022, the Company incorporated a new wholly-owned insurance subsidiary, GPIC Insurance Company (GPIC), domiciled in Canada.

In 2021, the Company established two new wholly-owned insurance subsidiaries in the United States, ZPIC Insurance Company (ZPIC) and QPIC Insurance Company (QPIC), domiciled in Missouri and Nebraska, respectively.

The Company’s business operations are conducted through subsidiaries.

In the U.S., the Company has two insurance subsidiaries:

American Pet Insurance Company ("APIC"), domiciled in New York, and ZPIC Insurance Company ("ZPIC"), domiciled in Missouri.

ZPIC does not yet underwrite any business.

The Company also owns an insurance Company domiciled in Canada, GPIC Insurance Company ("GPIC"), and three segregated cell businesses in Bermuda, Wyndham Segregated Accounts AX, Trupanion Germany, and Trupanion Switzerland.

In addition to general state law restrictions on payments of dividends and other distributions to stockholders applicable to all corporations, insurance companies are subject to further regulations that, among other things, may require such companies to maintain certain levels of equity and restrict the amount of dividends and other distributions that may be paid to their parent corporations.

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An extraordinary dividend or distribution is generally defined as a dividend or distribution that, in the aggregate in any 12-month period, exceeds the lesser of (i) 10% of surplus as of the preceding December 31 or (ii) the insurer’s adjusted net investment income for the 12-month period immediately preceding the declaration or distribution of the current dividend increased by the excess, if any, of net investment income over dividends declared or distributed during the period commencing thirty-six months prior to the declaration or distribution of the current dividend and ending twelve months prior thereto, and not including realized capital gains.

APIC paid dividends of $ 4.2 million and $ 7.6 million to the Company during the years ended December 31, 2024 and 2023, respectively, and no dividends during the year ended December 31, 2022.

APIC paid an extraordinary dividend of $26.0 million to the Company during the year ended December 31, 2025, and ordinary dividends to the Company in 2024 and 2023 of $ 4.2 million and $ 7.6 million, respectively.

The Company's insurance subsidiary in Canada, GPIC, is regulated by the Canadian Office of the Superintendent of Financial Institutions ("OSFI") and is required to maintain prescribed minimum capital and solvency levels, including compliance with OSFI's Minimum Capital Test ("MCT").

Dividends may not be paid if the subsidiary would fail to meet applicable regulatory capital requirements following the payment of the dividend.

Payment of dividends requires advance notice to OSFI and must be supported by a comprehensive analysis, including projections demonstrating capital adequacy and liquidity following the proposed dividend.

OSFI has the authority to restrict or prohibit dividend payments if it determines that such payments would be imprudent or could adversely affect GPIC's financial condition.

The Company's insurance subsidiaries in Bermuda are regulated by the Bermuda Monetary Authority.

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Per our contractual agreements with Wyndham Insurance Company (SAC) Limited, the allowable dividend is equivalent to the positive undistributed profit attributable to the shares.

Wyndham Segregated Account AX paid the Company a dividend of $ 8.6 million, $ 7.3 million, and $ 6.9 million during the years ended December 31, 2024, 2023 and 2022, respectfully.

Wyndham Segregated Account AX paid the Company dividends totaling $ 27.9 million, $ 8.6 million, and $ 7.3 million during the years ended December 31, 2025, 2024 and 2023, respectively.

The statutory net income for 2025, 2024 and 2023 and statutory capital and surplus at December 31, 2025, 2024 and 2023, for APIC were as follows (in thousands):

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As of December 31, 2025, APIC maintained $ 275.1 million of statutory capital and surplus which was above the company action level risk-based capital requirement of $ 106.0 million.

During the year ended December 31, 2024, the Company funded $ 1.1 million and $ 0.2 million of statutory capital to APIC and ZPIC, respectively, and no capital to GPIC.

During the year ended December 31, 2023, the Company funded $ 3.8 million, $ 0.2 million and CAD $ 8.5 million of statutory capital to APIC, ZPIC and GPIC, respectively.

ZPIC and GPIC will each be required to maintain a level of surplus as determined by their respective domiciliary regulators.

During 2024, the Company fully dissolved QPIC, which included total distributions of $ 7.0 million of previously required capital to Trupanion, Inc.

As of December 31, 2024, the Company had $ 11.5 million on deposit with various states in which it is licensed to write policies.

Loss before income taxes was as follows for the years ended December 31, 2024, 2023 and 2022 (in thousands):

The statutory net income for 2025, 2024 and 2023 and statutory capital and surplus at December 31, 2025, 2024 and 2023, for GPIC were as follows (in thousands):

As of December 31,

2025 2024 2023

Statutory net income (1)

$ 8,045 $ 128 $ 16

Statutory capital and surplus (1)

$ 37,684 $ 8,639 $ 8,516

(1) Amounts presented in CAD

As of December 31, 2025, GPIC maintained CAD $ 37.7 million of statutory capital and surplus which was above the required capital of CAD $ 10.1 million to maintain the minimum capital ratio of 100%.

During the year ended December 31, 2025, the Company funded $ 15.3 million, $ 0.3 million, $ 0.4 million and $ 0.8 million in total of statutory capital to GPIC, ZPIC, Trupanion Germany and Trupanion Switzerland, respectively, and no capital to APIC.

During the year ended December 31, 2024, the Company funded $ 1.1 million, $ 0.2 million, $ 0.1 million and $ 0.2 million of statutory capital to APIC, ZPIC, Trupanion Germany and Trupanion Switzerland, respectively, and no capital to GPIC.

ZPIC currently maintains $ 7.5 million of capital to remain licensed in certain U.S.

states and will be required to maintain a level of surplus as determined by its respective domiciliary regulator when it begins underwriting policies.

As of December 31, 2025, the Company had $ 11.5 million on deposit with various U.S.

states in which it is licensed to write policies.

Income (l oss) before income taxes was as follows for the years ended December 31, 2025, 2024 and 2023 (in thousands):

Year Ended December 31,

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2025 2024 2023

federal & state $ 120 $ ( 8 ) $ 82

$ — $ 120 $ ( 8 )

state 243 — —

Foreign 2,897 610 464

federal & state ( 48 ) 7 11

3,140 730 456

state and local 1 — —

Foreign ( 580 ) ( 687 ) ( 805 )

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

(1) These items include both federal and state components of tax expense (benefit) in 2024 and 2023 as the Company adopted ASU 2023-09 on a prospective basis.

The Company's effective tax rate reconciliation for the year ended December 31, 2025 has been prepared in accordance with ASU 2023-09 on a prospective basis.

Effective tax rate reconciliations for prior periods are presented in accordance with

guidance in effect at the time and have not been updated to conform to the new disclosure requirements.

As a result, the rate reconciliation for the current year may not be directly comparable to those of prior periods.

A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the financial statements is presented below:

Consolidated Rate Reconciliation Current Year (ASU 2023-09)

Year Ended December 31,

federal tax at statutory rate $ 4,619 21.0 %

Domestic federal

Tax credits ( 193 ) ( 0.9 )

Change in valuation allowance ( 4,574 ) ( 20.8 )

Nontaxable or nondeductible items:

Equity compensation 834 3.8

Other permanent adjustments 355 1.6

Other adjustments:

Other ( 35 ) ( 0.2 )

state income taxes, net of federal income tax effect (1)

Foreign tax effects:

Statutory rate difference between Canada and U.S.

( 532 ) ( 2.4 )

Provincial taxes (2)

Goodwill impairment 237 1.1

Other ( 127 ) ( 0.6 )

Germany 353 1.6

Other foreign jurisdictions 360 1.6

Worldwide changes in unrecognized tax benefits 6 —

Effective income tax rate $ 2,561 11.6 %

(1) State taxes in Oregon make up the majority (greater than 50 percent) of the tax effect in this category.

(2) State and local taxes in Ontario, British Columbia, and Alberta make up the majority of the tax effect in this category.

Consolidated Rate Reconciliation Prior Year (legacy guidance)

Year Ended December 31,

Federal income taxes at statutory rate 21.0 % 21.0 %

state income taxes 11.1 7.9 3.5

state income taxes, net of federal income tax effect 5.0 7.9

Equity compensation ( 16.3 ) ( 9.2 )

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Depreciation and amortization — 3,387

Lease Liability 3,100 —

Equity compensation 1,347 1,323

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Deferred costs ( 1,657 ) ( 1,569 )

Right-of-use Asset ( 3,303 ) —

Intangible assets ( 1,813 ) ( 2,302 )

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The Company is subject to taxation in various states and countries, and may be subject to audit or examination by the relevant authorities in respect to those particular jurisdictions primarily for 2018 and thereafter.

On July 4, 2025, the One Big Beautiful Bill Act ("2025 U.S.

Tax Act") was enacted in the United States.

Among the changes, the 2025 U.S.

Tax Act restores immediate expensing of domestic research and development costs and modifies certain international provisions.

The 2025 U.S.

Tax Act did not have a material impact on the current year effective rates for income taxes or cash taxes paid.

While we continue to evaluate the impact for future years, we do not anticipate a material impact for income taxes or cash taxes paid.

Many countries have enacted the Organization for Economic Cooperation and Development’s 15% global minimum tax regime.

The legislation did not have a material impact on our current year effective rates for income taxes or for cash taxes paid, however we continue to monitor developments and evaluate impacts, if any, of these rules on our results of operations and cash flows.

For the year ended December 31, 2025, the Company intends to invest substantially all of its foreign subsidiary earnings, as well as its capital in its foreign subsidiaries, indefinitely outside of the U.S.

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If the tax position meets the more-likely-than-not criteria, the portion of the tax benefit greater than 50% likely to be realized upon settlement with the relevant taxing authority is recognized in the financial statements.

No significant changes in uncertain tax positions are expected in the next twelve months.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):

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Increases (decreases) to tax positions related to prior periods 6 3 ( 72 )

Increases to tax positions related to the current year — 1 5

Increases (decreases) to tax positions related to the current year 1 — 1

Balance, end of year $ 90 $ 83 $ 80

The Company's disaggregated presentation of net cash paid for income taxes for the year ended December 31, 2025 has been prepared in accordance with ASU 2023-09 on a prospective basis.

As a result, the net cash paid for income taxes for the current year may not be directly comparable to those of prior periods.

Net cash paid for income taxes in 2025 consisted of the following:

December 31, 2025

Canada - Federal 250

Canada - British Columbia 95

Canada - Ontario 94

United Kingdom 405

Total $ 1,045

The Company paid income taxes of $ 0.5 million and $ 0.6 million in the years ended December 31, 2024 and 2023, respectively.

Employee Benefits

1 unchanged sentence

The plan allows employees to contribute a percentage of their pretax earnings annually, subject to limitations imposed by the Internal Revenue Service.

The plan also allows the Company to make a matching contribution, subject to certain limitations.

As of December 31, 2024, the Company has made no matching contributions to the 401(k) plan.

The Company instituted a 401(k) match effective January 1, 2025, wherein employee contributions will be matched up to 1% of eligible compensation.

The plan also allows the Company to make a

matching contribution, subject to certain limitations.

The Company made matching contributions of $ 0.8 million for the year ended December 31, 2025, and no matching contributions during the years ended December 31, 2024 and 2023.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data