SWK Holdings Corporation 9.00% Senior Notes due 2027 Q4 FY2024 earnings call

• The fourth quarter was highlighted by solid financial performance, including $8.2 million of finance segment net income, improvement in portfolio credit quality, and $44 million of capital deployed into yielding finance receivables to life science companies.
• Repurchased approximately 100,000 shares for $1.6 million since September 30, 2024.
• Closed an up to $8 million senior secured term loan to Triple Ring Technologies, upsized it to $30 million and advanced a cumulative $10.6 million to four performing borrowers; in January, closed an up to $15 million term loan with Impedimed with $10 million advanced at close.
• Three SWK finance receivables were repaid at premiums to the GAAP carrying value: Veru made a $4.2 million payment, MolecuLight made a final $12.2 million payment, and ANI Pharma made a $17.25 million payment.
• At December 31, 2024, had $13.8 million of gross finance receivables on non-accrual with a 15% CECL reserve.
• Signed a transaction to sell the remaining performing royalty portfolio for $34 million, expected to close in approximately two weeks.
• MOD3 Pharma division revenue totaled $3.6 million in 2024, tripling from $1.2 million in 2023, and focused on positioning for unsubsidized profitability by year-end.

The Finance segment had net income of $8.2 million in the fourth quarter. Non-GAAP tangible financing book value per share increased 8% year-over-year to $21.15. Approximately 100,000 shares were repurchased for $1.6 million since September 30, 2024. The MOD3 Pharma division's revenue totaled $3.6 million in 2024, which was triple the $1.2 million in 2023. In terms of revenue contribution, the Finance segment's performance is a key part of the company's overall results, and the MOD3 division's revenue growth is significant for its segment.

• Anticipate declaring a dividend on the closing of the final royalty transaction.
• Expect continued growth in the MOD3 CDMO division in 2025.
• Still active in share repurchasing, and the Board views the buyback as an attractive use of capital, likely to reauthorize the buyback program when out of the blackout period around May 15 when reporting the first quarter.

Q: When you're thinking about a dividend, since it's such a large pile of cash, are you thinking about ongoing dividend or a special dividend, returning some of that cash, that cash pile to shareholders?

A: Yeah, Scott. Thanks. So the Board is still considering our options. I would anticipate initially a one-time special dividend, that doesn't mean that there might not be additional special dividends in the future. But at this time, I don't anticipate a recurring dividend.

Q: As far as the buyback, where are you on the current buyback? And then again, if that could be something the Board is going to consider about renewing or increasing the buyback?

A: Yeah. And Adam, if you have the e-mail pulled up, I might -- from Courtney, I might have you look and check how much room we have. But we do have room -- enough room on our buyback. It's been interesting trying to navigate this with our blackout period. So once we go into the blackout period, the algorithm takes over, and we don't really have control over how many shares are repurchased. When we're not in the blackout period, we can direct it and be more aggressive or less aggressive. So I would say, we're still active repurchasers of our shares. We think particularly with the news we announced today, shares are trading at a 20% discount, that's an attractive use of capital. So we'll continue to do that. We should be out of the blackout period when we report first quarter roughly May 15, in that ballpark and the program will expire. I think it expires roughly that date. I don't -- we have not discussed it, but I think the Board views the buyback as an attractive use of capital. And I would expect, assuming everything else is equal, that the Board would strongly consider reauthorizing the program for another year.