SWK Holdings Corp.

03/20/2026 | Press release | Distributed by Public on 03/20/2026 14:32

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our financial statements and the related notes included elsewhere in this Annual Report. Statements below regarding future events or performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results could be quite different from those expressed or implied by the forward-looking statements. Factors that could affect results are discussed more fully under the sections entitled "Risk Factors, " and "Special Note Regarding Forward-Looking Statements" as revised and supplemented by those risks described from time to time in other reports which we file with the SEC. Although forward-looking statements help to provide complete information about us, readers should keep in mind that forward-looking statements may not be reliable. Readers are cautioned not to place undue reliance on the forward-looking statements. We undertake no duty to update any forward-looking statements made herein after the date of this Annual Report.
Overview
For the year ended December 31, 2025, the Company operated two reportable segments, Pharmaceutical Development and Finance Receivables. During the third quarter of 2025, the Company sold substantially all of the assets of the Pharmaceutical Development Segment, after which the Company's operations were primarily attributable to the Finance Receivables segment. Please refer to Part II, Item 8, Financial Statements, Notes 1 and 12 of the notes to the consolidated financial statements for further information regarding segment information.
Finance Receivables Portfolio Overview
The tables below provide an overview of our outstanding transactions as of, and for the year ended, December 31, 2025 (in thousands, except rate, share and per share data):
Royalty Purchases Licensed Technology Funded Amount GAAP Balance Revenue Recognized
Besivance® (1)
Ophthalmic antibiotic $ 6,000 $ - $ 59
Forfivo XL® (5)
Depressive disorder treatment 6,000 - 506
Coflex®/Kybella®(5)
Spinal stenosis/submental fullness 4,350 - 48
Cambia® (5)
NSAID migraine treatment 8,500 - 98
Duo Royalty (5)
Japanese Women's health/cystic fibrosis 15,353 - 591
Immune Globulin (5)
Immune Globulin Therapeutics 14,100 - 443
Relief (5)
Rare Disease Portfolio 7,701 - 336
Best ABT, Inc.(2), (3)
Oncology diagnosis 5,784 1,755 -
Flowonix Medical, Inc.(2), (3), (4)
Drug delivery device
12,455 5,875 -
Ideal Implant, Inc.(2), (3)
Aesthetics 4,025 2,286 -
Iluvien® (6)
Diabetic macular edema 16,501 - 519
Term Loans Type Maturity Date Principal GAAP Balance Rate Revenue Recognized
4Web, Inc. First lien 12/31/27 $ 19,486 $ 23,533 12.8% $ 4,299
Advanced Oxygen Therapy Inc. ("AOTI") First lien 02/15/29 19,478 19,679 10.9% 2,055
Elutia, Inc.(6)
First lien 08/10/27 - - 11.0% 4,188
Biotricity, Inc. First lien 05/15/27 13,846 14,514 11.5% 2,668
CDMO Manufacturer First lien 09/13/27 5,000 5,600 13.3% 809
eTon Pharmaceuticals, Inc. First lien 12/17/27 30,000 29,909 11.8% 4,556
Journey Medical Corporation First lien 06/27/28 25,000 25,325 12.8% 3,668
MedMinder Systems, Inc. First lien 08/18/28 22,500 23,082 9.1% 3,138
MolecuLight, Inc.(6)
First lien 12/29/27 - - 12.8% 27
Nicoya Lifesciences, Inc. First lien 04/14/27 8,500 8,922 12.8% 1,315
NeoLight, LLC First lien 05/15/27 5,756 6,151 13.5% 905
Shield Therapeutics, Plc First lien 09/28/28 20,000 20,070 14.3% 3,297
SKNV, LLC First lien 11/15/28 15,997 16,437 11.3% 1,970
Triple Ring Technologies First lien 12/06/28 8,000 8,092 12.0% 1,136
ImpediMed LTC First lien 02/05/30 15,000 14,675 13.8% 1,808
Marketable Investments Number of Shares Funded Amount GAAP Balance Change in Fair Value
AOTI Common Stock 402,634 N/A 149 (336)
Elutia, Inc. 50,000 N/A 35 (48)
Privately Held Shares Number of Shares
Epica International, Inc 25,000
SKNV, LLC 26,575
MolecuLight, Inc. 250,000
Warrants to Purchase Stock Number of Shares Exercise Price per Share GAAP Balance Change in Fair Value
4Web, Inc. TBD $ - $ - $ -
ImpediMed Tranche 1 12,491,870 $ 0.05 176 (140)
ImpediMed Tranche 2 6,245,935 $ 0.05 88 (93)
Aziyo Biologics, Inc. Tranche 1 157,895 $ 6.65 19 (334)
Aziyo Biologics, Inc. Tranche 2 30,075 $ 6.65 4 (64)
Biotricity, Inc. Tranche 1 9,589 $ 37.56 1 -
Biotricity, Inc. Tranche 2 600,000 $ 0.50 166 3
Biotricity, Inc. Tranche 3 27,150 $ 2.21 6 (42)
Biotricity, Inc. Tranche 4 27,150 $ 2.21 6 (43)
Biotricity, Inc. Tranche 5 120,000 $ 0.37 34 (4)
CDMO Manufacturer 211,442 $ 1.42 - -
DxTerity Diagnostics, Inc. 2,019,231 $ - - -
Epica International, Inc. TBD $ - - -
eTon Pharmaceuticals, Inc. Tranche 1 51,239 $ 5.86 578 154
eTon Pharmaceuticals, Inc. Tranche 2 18,141 $ 6.62 199 51
eTon Pharmaceuticals, Inc. Tranche 3 289,736 $ 5.32 3,941 932
Nicoya Lifesciences, Inc. 276,630 C$ 1.81 - -
Nicoya Lifesciences, Inc. 117,305 C$ 6.26 - -
Shield Warrant 8,910,540 $ 0.14 695 355
MedMinder, System, Inc. Tranche 1 57,859 $ 10.37 - -
MedMinder Systems, Inc. Tranche 2 7,233 $ 10.37 - -
NeoLight, LLC 105,048 $ 7.62 - -
MolecuLight, Inc. 394,322 C$ 0.84 - -
Assets Revenue Recognized
Total gross finance receivables $ 225,905 $ 38,439
Total marketable investments 184 -
Fair value of warrant assets 5,913 -
Total $ 232,002 $ 38,439
(1) US royalty was paid off in a prior period but the Company continues to receive insignificant royalties on international sales.
(2) Investment considered partially impaired.
(3) Investment on non-accrual.
(4) Flowonix Medical assets were sold to a medical device company in a prior period. In exchange for releasing its lien, SWK received cash at close and receives royalties on sales of two products.
(5)
Royalties were sold as of December 31, 2025
(6)
Investment was paid off during the year ended December 31, 2025
Unless otherwise specified, our senior secured debt assets generally are repaid by a revenue interest that is charged on a company's quarterly net sales and royalties.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, stock-based compensation, impairment of finance receivables and long-lived assets, impairment of goodwill and identifiable intangible assets, valuation of warrants and investments, contingent consideration, income taxes and contingencies and litigation, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our consolidated financial statements because they inherently involve significant judgments and uncertainties. For a discussion of our significant accounting policies, refer to Note 1 of the notes to the consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data.
Allowance for Credit Losses
The allowance for credit losses is reviewed for adequacy based on portfolio collateral values and credit quality indicators, including non-performing assets, evaluation of portfolio diversification and concentration as well as economic conditions to determine the need for a qualitative adjustment. We review our finance receivables periodically to determine the probability of loss, and record charge-offs after considering such factors as delinquencies, the financial condition of obligors, the value of underlying collateral, as well as third-party credit enhancements such as guarantees.
The process of determining the level of the allowance for credit losses requires a high degree of judgment. Others given the same information could reach different reasonable conclusions.
Finance Receivables
Finance receivables are measured based upon the difference between the recorded investment in each receivable and either the present value of the expected future cash flows discounted at each receivable's effective interest rate (the receivable's contractual interest rate adjusted for any deferred fees, costs, discount or premium at the date of origination or acquisition) or if a receivable is collateral dependent, the collateral's fair value. When impairment is determined to be probable, the measurement will be based on the fair value of the collateral. The determination of impairment involves management's judgment and the use of market and third-party estimates regarding collateral values. Valuations of impaired receivables and corresponding impairment affect the level of the allowance for credit losses.
Revenue Recognition
Finance Receivables Segment
Our Finance Receivables segment records interest income on an accrual basis based on the effective interest rate method to the extent that we expect to collect such amounts. Incentive fees, if any, are recognized when earned at the end of the relevant performance period, pursuant to the underlying contract. Other administrative service revenues are recognized when contractual obligations are fulfilled or as services are provided.
Fair Value of Financial Instruments
The fair value of our financial instruments reflects the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).
Our financial instruments not required to be adjusted to fair value on a recurring basis consist principally of cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses. We believe the carrying amount of cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their relatively short maturities.
Income Taxes
The recognition of certain net deferred tax assets of our reporting entities is dependent upon, but not limited to, the future profitability of the reporting entity, when the underlying temporary differences will reverse, and tax planning strategies. Further, management's judgment regarding the use of estimates and projections is required in assessing the Company's ability to realize deferred tax assets related to NOL carryforwards, as most of these assets are subject to limited carryforward periods. In evaluating realizability, management considered the pending merger with a business development company and its potential impact on the availability of future taxable income.
We will continue to assess the need for a valuation allowance on the deferred tax assets by evaluating both positive and negative evidence that may exist at each reporting date. Any adjustments to the deferred tax asset valuation allowance is recorded in the statement of operations in the period it is determined an adjustment is required.
Please refer to Note 13 of the notes to the consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, refer to Note 1 of the notes to the consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data.
Results of Operations
This section of this Annual Report generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussion of 2024 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report 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 year ended December 31, 2024.
Comparison of the Years Ended December 31, 2025 and 2024
The following table summarizes the results of our operations:
(in millions) For the Year Ended
December 31, 		Change
2025 2024
Revenues $ 41.5 $ 45.0 $ (3.5)
Provision for (benefit from) credit losses (0.9) 12.8 $ (13.7)
Loss on impairment 0.6 5.8 $ (5.2)
Loss on disposal of inventory 0.3 - $ 0.3
Interest expense 4.8 4.7 $ 0.1
Pharmaceutical manufacturing, research and development expense 1.6 2.2 $ (0.6)
Change in fair value of acquisition-related contingent consideration - (4.9) $ 4.9
Depreciation and amortization expense - 1.4 $ (1.4)
General and administrative expense 14.8 11.5 $ 3.3
Other income (expense), net (0.2) 6.8 $ (7.0)
Income tax expense 22.6 4.9 $ 17.7
Net income (loss) (2.5) 13.5 $ (16.0)
Revenues
Revenues decreased to $41.5 million for the year ended December 31, 2025, from $45.0 million for the year ended December 31, 2024. The $3.5 million decrease in revenue for the year ended December 31, 2025, consisted of a $2.1 million decrease in Finance Receivables segment revenue and a $1.4 million decrease in Pharmaceutical Development segment revenue prior to the sale of MOD3. The $2.1 million decrease in Finance Receivables segment revenue was primarily due to a decrease in interest, fees and royalties earned on finance receivables that were paid off or sold during the period.
Provision for (benefit from) Credit Losses
Our provision for credit losses is established through charges or credits to income in the form of the provision in order to bring our allowance for credit losses for loans and unfunded commitments to a level deemed appropriate by management. We recognized a benefit from credit losses of $0.9 million and an expense of $12.8 million for the years ended December 31, 2025 and 2024, respectively. The $13.7 million decrease was primarily due to impairments included within the provision for credit losses during the year ended December 31, 2024.
Interest Expense
Interest expense consists of interest accrued on our revolving line of credit, 9.00% Senior Notes due 2027, unused line of credit and maintenance fees, as well as amortization of debt issuance costs. Interest expense remained consistent for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Pharmaceutical Manufacturing, Research and Development Expense
Pharmaceutical manufacturing, research and development expense decreased from $2.2 million for the year ended December 31, 2024 to $1.6 million for the year ended December 31, 2025. The $0.6 million decrease was primarily due to the sale substantially all of the assets of MOD3 during the period.
Change in Fair Value of Contingent Consideration
The change in the gain on the fair value of contingent consideration is primarily due to a recognized gain of $4.9 million from the change in fair value of acquisition-related contingent consideration during the year ended December 31, 2024. The contingent consideration is the earnout related to the 2019 acquisition of MOD3 and sharing of certain milestone and royalties due to MOD3 pursuant to a license agreement ("License Agreement") with Cara Therapeutics, Inc. ("Cara") for oral formulation rights to MOD3 technology to develop and commercialize Oral KORSUVA™ in any indication worldwide, excluding South Korea and Japan. During the year ended December 31, 2024, it was determined the milestones and royalties pursuant to the License Agreement would not be realized as a result of non-viability of the product covered by the License Agreement. Accordingly, the Company concluded that the liability for contingent consideration, previously held at its estimated fair value of $4.9 million, should be $0.
Depreciation and Amortization Expense
The $1.4 million decrease in depreciation and amortization expense for the year ended December 31, 2025 primarily consists of a decrease in amortization expense related to no longer amortizing intangible assets related to the Cara license as the intangible assets were fully impaired during the prior year. In addition, MOD3 was classified as held for sale for the current period resulting in no depreciation on fixed assets classified as held for sale.
General and Administrative Expense
General and administrative expenses consist primarily of compensation, stock-based compensation and related costs for management, staff and Board; legal and audit expenses; and corporate governance expenses. General and administrative expenses increased to $14.8 million for the year ended December 31, 2025 from $11.5 million for the year ended December 31, 2024 primarily due to an increase in compensation costs and legal costs during the period.
Other Income (Expense), Net
Other income (expense), net decreased to an expense of $0.2 million for the year ended December 31, 2025. Other income, net was $6.8 million for the year ended December 31, 2024. The $7.0 million change is primarily due to a loss on revaluation of finance receivables compared to a gain on finance receivables in the same period in the prior year.
Income Tax Expense
During the years ended December 31, 2025 and 2024 we recognized $22.6 million and $4.9 million of income tax expense, respectively. Income tax expense increased period over period due to a reduction in the realizability of the deferred tax assets as of December 31, 2025.
Liquidity and Capital Resources
Asof December 31, 2025, we had $42.8 million in cash and cash equivalents, compared to $5.9 million as of December 31, 2024. The primary driver of the $36.9 millionincrease in our cash balance was primarily related to interest, fees, principal and royalty payments received on finance receivables, and proceeds from the sale and repayment of finance receivables. The increase in cash and cash equivalents was partially offset by the payment of dividends, investment funding, net of deferred fees and origination expenses, net payments of our credit facility, payments for payroll and benefits expense, payments on accounts payable, and share repurchases.
We entered into a $45.0 million revolving credit facility in June 2023 with First Horizon Bank. The Credit Agreement provides for one or more incremental increases not to exceed $80.0 million, subject to the consent of the Agent and each Lender, at any time prior to the Commitment Termination Date. On December 4, 2025, the Company, SWK Funding LLC, First Horizon Bank, and the financial institution party thereto entered into a Sixth Amendment to the Credit Agreement (the "Amendment"), to reduce the aggregate commitments thereunder from $60.0 million to $10.0 million. As of December 31, 2025, there was no outstanding amount under the new Credit Agreement. The $10.0 million Credit Agreement contains a $5.0 million liquidity covenant, bringing the total amount available for borrowing to $5.0 million.
Primary Driver of Cash Flow
Our ability to generate cash in the future depends primarily upon our success in implementing our Finance Receivables business model of generating income by providing capital to a broad range of life science companies, institutions and inventors. During the period presented we generated income primarily from four sources:
1.Primarily owning or financing through debt investments, royalties generated by the sales of life science products and related intellectual property;
2.Receiving interest and other income by advancing capital in the form of secured debt to companies in the life science sector;
3.Pharmaceutical development, manufacturing, and licensing activities; and
4.Realizing capital appreciation from equity-related investments in the life science sector.
As of December 31, 2025, our finance receivables portfolio contains $218.6 million of net finance receivables. We expect these assets to generate positive cash flows in 2026. We continuously monitor the short and long-term financial position of our finance receivables portfolio. In addition, the majority of our finance receivables portfolio are debt instruments that carry floating interest rates. Changes in interest rates, including the levels of the underlying reference rates, may affect the interest income for debt instruments with floating rates. We believe we are well positioned to benefit should market interest rates rise in the future.
Off-Balance Sheet Arrangements
In the normal course of operations, we engage in a variety of financial transactions that, in accordance with GAAP, are not recorded in our consolidated financial statements. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are used primarily to manage partner companies' requests for funding and take the form of loan commitments and lines of credit.
The contractual amounts of commitments to extend credit represent the amounts of potential accounting loss should the contract be fully drawn upon, the partner company defaults, and the value of any existing collateral becomes worthless. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments.
As of December 31, 2025, we had $2.5 million in unfunded commitments. Please refer to Item 1., Financial Statements, Note 8 of the notes to the consolidated financial statements for further information regarding the Company's commitments and contingencies.
SWK Holdings Corp. published this content on March 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 20, 2026 at 20:32 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]