SWK Holdings Corp (SWKH) Reports Decline in Q3 2023 Earnings Amidst Strategic Financial Maneuvers
SWK Holdings Corp (NASDAQ:SWKH) Q3 GAAP net income fell to $4.5 million, or $0.36 per diluted share, from $6.6 million, or $0.51 per diluted share in Q3 2022.
Finance receivables segment adjusted non-GAAP net income slightly decreased to $5.8 million from $6.0 million year-over-year.
Gross finance receivables grew by 10.3% to $234.9 million compared to the previous year.
SWKH strengthened its balance sheet with a $33.0 million public offering of senior notes and upsized credit facility post-quarter.
SWK Holdings Corp (NASDAQ:SWKH), a life science-focused specialty finance company, announced its financial results for the third quarter ended September 30, 2023, on November 9, 2023. The company reported a decrease in GAAP net income to $4.5 million, or $0.36 per diluted share, compared to $6.6 million, or $0.51 per diluted share, for the same period last year. Despite the decline, SWKH made significant strategic moves to strengthen its financial position, including closing a $33.0 million public offering of senior notes and upsizing its credit facility to $60.0 million with Woodforest National Bank.
Financial Performance Overview
SWKH's total revenue for Q3 2023 was $9.0 million, a 34.2% decrease from $13.6 million in Q3 2022. The drop was primarily due to a $4.7 million decrease in Pharmaceutical Development segment revenue, as no milestone revenue similar to the $5.0 million received in the previous year was recognized. However, the Finance Receivables segment saw a slight increase in revenue.
Pre-tax net income for the quarter was $4.1 million, down from $8.6 million year-over-year. This decrease was attributed to the lower consolidated revenue and a $2.0 million decrease in unrealized losses on warrant assets, equity securities, and foreign currency transactions, partly offset by a $2.4 million decrease in operating expenses.
Portfolio and Balance Sheet Strength
SWKH's gross finance receivables increased by 10.3% year-over-year to $234.9 million. The finance portfolio's effective yield was 14.0%, a slight decrease from the previous year. Book value per share as of September 30, 2023, was $22.19, with a non-GAAP tangible financing book value per share of $19.35, representing a 6.2% increase year-over-year after adjusting for CECL adoption.
During the quarter, SWKH repurchased 60,335 shares of common stock for a total cost of $1.0 million, and year-to-date through November 6, 2023, the company has purchased 361,593 shares for a total cost of $6.1 million.
Operational Highlights and Future Outlook
SWKH's subsidiary, Enteris, booked $2.7 million of CDMO projects and has approximately $5.0 million of proposals outstanding. The company anticipates strong revenue growth in the fourth quarter driven by referrals from its strategic partner.
Looking ahead, SWKH is focused on deploying its balance sheet capital, which currently totals more than $60.0 million, and is in regular contact with borrowers to navigate the challenging economic and capital markets environment.
For more detailed financial tables and a reconciliation of GAAP to non-GAAP financial measures, investors are encouraged to review the full earnings release.
SWKH will host a conference call and live audio webcast on Thursday, November 9, 2023, at 10:00 a.m. ET to discuss its corporate and financial results for Q3 2023.
For further information on SWK Holdings Corporation's financial results and operational strategies, please visit SWKH's investor relations page.
Explore the complete 8-K earnings release (here) from SWK Holdings Corp for further details.
This article first appeared on GuruFocus.
