UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 2.02. | Results of Operations and Financial Condition |
On August 14, 2023, Abacus Life, Inc. announced the results of its operations and its financial condition for the quarter ended June 30, 2023. The full text of the earnings release is included here as Exhibit 99.1 hereto.
| Item 9.01. | Financial Statement and Exhibits. |
| (a) | Exhibits. |
99.1 Earnings Release dated August 14, 2023
104 Cover page Interactive Date file (embedded within Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Abacus Life, Inc. | ||||||
| Date: August 14, 2023 | By: | /s/ Jay Jackson | ||||
| Name: | Jay Jackson | |||||
| Title: | Chief Executive Officer | |||||
2
Exhibit 99.1
ABACUS LIFE REPORTS SECOND QUARTER 2023 RESULTS
- Revenue Grew 30% Year-over-Year to $18.3 Million -
- Increased Originations Capital Deployment by 88% Year-over-Year to $59.7 Million -
- Net Income Increased 40% Year-over-Year to $6.4 Million -
- Adjusted EBITDA Grew 33% Year-over-Year to $8.8 Million -
ORLANDO, Fla. – August 14, 2023 – Abacus Life, Inc. (“Abacus” or the “Company”) (NASDAQ: ABL), a leading buyer of life insurance policies and vertically integrated alternative asset manager specializing in specialty insurance products, today reported results for the second quarter ended June 30, 2023.
“Our strong second quarter results continue to validate Abacus’ differentiated business model and further contribute to our long track record of sustainable and profitable growth,” said Jay Jackson, Chief Executive Officer of Abacus Life. “In addition to our continued progress, we were very pleased to successfully complete our public listing post-quarter end, a milestone for our long-term growth ambitions. Our proven business model, expert team, and our wealth of data and innovative technology positions us well to execute on our strategic initiatives, take advantage of the many exciting opportunities that lie ahead, and ultimately create long-term value for our shareholders.”
Second Quarter 2023 Highlights
| • | Total revenue grew 30% to $18.3 million, compared to $14.1 million in the prior-year period |
| • | Originations capital deployment increased 88% to $59.7 million, compared to $31.9 million in the prior-year period; number of policy originations grew 4% to 141, compared to 135 in the prior-year period |
| • | Total operating expenses (excluding unrealized gains and losses and change in fair value) were $4.3 million, compared to $4.6 million in the prior-year period |
| • | Net income increased 40% to $6.4 million, compared to $4.6 million in the prior-year period |
| • | Adjusted EBITDA grew 33% to $8.8 million, compared to $6.6 million in the prior-year period |
| • | Adjusted EBITDA margin of 48.4%, compared to 47.0% in the prior-year period |
| • | Annualized Return on invested capital (ROIC) for the quarter ended June 30, 2023 of 28.5% |
| • | Annualized Return on equity (ROE) for the quarter ended June 30, 2023 of 16.0% |
Second Quarter 2023 Results
| • | Active management revenue increased 38% to $11.0 million, compared to $8.0 million in the prior-year period. The increase was primarily attributable to maturities of policies accounted for under the investment method. |
| • | Total revenue from portfolio servicing segment was $0.4 million, roughly comparable to the prior-year period. |
| • | Originations revenue at Abacus Settlements nearly quadrupled to $2.7 million, compared to $0.7 million in the prior-year period. The increase was primarily attributable to higher pricing on the sale of broker policies which led to higher commission fees. |
| • | Related party revenue at Abacus Settlements was $4.1 million, compared to $4.9 million in the prior-year period. The decrease was mainly due to a decrease in Nova Origination sales and transaction fee reimbursements, partially offset by increased LMA Originations services. |
| • | Net income increased 40% to $6.4 million, compared to $4.6 million in the prior-year period, driven by strong top-line performance and managing costs efficiently. |
| • | Adjusted EBITDA for the quarter grew 33% to $8.8 million, compared to $6.6 million in the prior-year period. The increase was primarily attributable to strong revenue growth, partially offset by higher operating expenses. Adjusted EBITDA margin remained strong at 48.4% for the quarter, compared to 47.0% in the prior-year period. |
Liquidity and Capital
As of June 30, 2023, the Company had cash and cash equivalents of $20.6 million, balance sheet policy assets of $66.5 million and outstanding long-term debt at fair value of $66.2 million.
Webcast and Conference Call
A webcast and conference call to discuss the Company’s results will be held today beginning at 9:00 a.m. (Eastern Time). A live webcast of the conference call will be available on Abacus Life’s investor relations website at ir.abacuslifesettlements.com. The dial-in number for the conference call is (877) 407-9716 (toll-free) or (201) 493-6779 (international). Please dial the number 10 minutes prior to the scheduled start time.
A webcast replay of the call will be available at ir.abacuslifesettlements.com for one year following the call.
Safe Harbor Statement
Statements made in this press release that are not historical facts, including statements accompanied by words such as “will,” “believe,” “estimate,” “expect,” “intend,” “anticipate,” “goals,” “prospects,” or similar words, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company’s plans and performance. These statements are based on management’s estimates, assumptions and projections as of the date of this release and are not guarantees of future performance. Actual results may differ materially from the results expressed or implied in these statements as the result of risks, uncertainties and other factors including, but not limited to: the fact that our loss reserves are bases on estimates and may be inadequate to cover our actual losses; the failure to properly price our insurance policies; the geographic concentration of our business; the cyclical nature of our industry; the impact of regulation on our business; the effects of competition; failing to sustain our relationships with independent agencies; the failure to meet our investment objectives; the inability to acquire additional capital on favorable terms; the effects of acts of terrorism and the factors set forth in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the Annual Report on Form 10-K and Quarterly Report on Form 10-Q and subsequent periodic reports. The Company cautions you not to place undue reliance on the forward-looking statements contained in this release. Any forward –looking statements speak only as of their dates. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.
About Abacus
Abacus is a leading vertically integrated alternative asset manager specializing in life insurance products. Since 2004, the Company has purchased life insurance policies from consumers seeking liquidity and has actively managed those policies over time (via trading, holding, and/or servicing). With over $2.9 billion in face value of policies purchased, Abacus has helped thousands of clients maximize the value of their life insurance.
Over the past 19 years, the Company has built an institutionalized origination and portfolio management process that is supported by an 84-person team, long-term relationships with 78 institutional partners and 30,000 financial advisors, and the ability to operate in 49 states. The Company has serviced approximately $950 million in policies and has managed assets for large asset managers and third-party investment funds.
Abacus’ leadership team averages 20+ years of experience and consists of innovators since the life settlements industry’s inception in the mid-90s.
The Company is a proud member of the Life Insurance Settlements Association (LISA) and complies with HIPAA and privacy laws to maintain and protect confidentiality of financial, health, and medical information. Abacus is also proud to be a BBB Accredited Business with an A+ rating.
www.Abacuslife.com
Contact:
Abacus Life Investor Relations
investors@abacuslife.com
Abacus Life Public Relations
press@abacuslife.com
ABACUS LIFE, INC.
Condensed Consolidated Balance Sheets
| June 30, 2023 (unaudited) |
December 31, 2022 |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 20,611,122 | $ | 30,052,823 | ||||
| Accounts receivable |
192,595 | 10,448 | ||||||
| Related party receivable |
78,310 | 198,364 | ||||||
| Due from affiliates |
10,473,748 | 2,904,646 | ||||||
| Other receivables |
21,252 | — | ||||||
| Prepaid expenses and other current assets |
829,595 | 116,646 | ||||||
|
|
|
|
|
|||||
| Total current assets |
32,206,622 | 33,282,927 | ||||||
| Property and equipment, net |
177,931 | 18,617 | ||||||
| Intangible assets, net |
32,900,000 | — | ||||||
| Goodwill |
140,287,000 | — | ||||||
| Operating right-of-use assets |
240,816 | 77,011 | ||||||
| Life settlement policies, at cost |
9,889,610 | 8,716,111 | ||||||
| Life settlement policies, at fair value |
56,685,617 | 13,809,352 | ||||||
| Available for sale securities, at fair value |
1,000,000 | 1,000,000 | ||||||
| Other investments |
1,600,000 | 1,300,000 | ||||||
| Due from members and affiliates |
75,582 | — | ||||||
| State security deposit |
206,873 | — | ||||||
| Certificate of deposit |
262,500 | — | ||||||
| Other assets, at fair value |
1,801,886 | 890,829 | ||||||
|
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|
|
|
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| TOTAL ASSETS |
$ | 277,334,437 | $ | 59,094,847 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Accrued expenses |
$ | 524,400 | $ | — | ||||
| Accounts payable |
401,500 | 40,014 | ||||||
| Operating lease liabilities - current portion |
227,561 | 48,127 | ||||||
| Due to members and affiliates |
10,415,154 | 263,785 | ||||||
| Due to owners |
717,429 | — | ||||||
| Contract liabilities - deposits on pending settlements |
981,217 | — | ||||||
| Accrued transaction costs |
182,571 | 908,256 | ||||||
| Other current liabilities |
258,759 | 42,227 | ||||||
| Income taxes payable |
185,831 | — | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
13,894,422 | 1,302,409 | ||||||
Abacus Life, Inc.
Condensed Consolidated Balance Sheets
| SPV purchase and sale note |
25,000,000 | — | ||||||
| Long-term debt, at fair value |
66,165,396 | 28,249,653 | ||||||
| Operating lease liabilities - noncurrent portion |
16,864 | 29,268 | ||||||
| Deferred tax liability |
9,320,240 | 1,363,820 | ||||||
| Warrant liability |
2,438,600 | — | ||||||
|
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|
|||||
| TOTAL LIABILITIES |
116,835,522 | 30,945,150 | ||||||
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|
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| COMMITMENTS AND CONTINGENCIES (11) |
||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT) |
||||||||
| Class A common stock, $0.0001 par value; 200,000,000 authorized shares; 62,961,688 shares issued and outstanding |
6,296 | — | ||||||
| LMA members’ capital |
— | 50,000 | ||||||
| Additional paid-in capital |
188,641,886 | 660,000 | ||||||
| Retained earnings/(accumulated deficit) |
(29,382,362 | ) | 25,487,323 | |||||
| Accumulated other comprehensive income |
877,306 | 1,052,836 | ||||||
| Non-controlling interest |
355,789 | 899,538 | ||||||
|
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|
|
|||||
| Total shareholders’ equity (deficit) |
160,498,915 | 28,149,697 | ||||||
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|
|
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| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
$ | 277,334,437 | $ | 59,094,847 | ||||
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|
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The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Abacus Life, Inc.
Condensed Consolidated Statement of Operations
| Three Months Ended June 30, |
||||||||
| 2023 | 2022 | |||||||
| REVENUES: |
||||||||
| Portfolio servicing revenue |
||||||||
| Related party servicing revenue |
$ | 329,629 | $ | 419,253 | ||||
| Portfolio Servicing revenue |
24,737 | 169 | ||||||
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|
|
|
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| Total portfolio servicing revenue Active management revenue |
354,366 | 419,422 | ||||||
| Investment Income from life insurance policies held using investment method |
8,263,499 | 5,965,466 | ||||||
| Change in fair value of life insurance policies (policies held using fair value method) |
2,760,900 | 2,014,013 | ||||||
|
|
|
|
|
|||||
| Total active management revenue |
11,024,399 | 7,979,479 | ||||||
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|
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| Total revenues |
11,378,765 | 8,398,901 | ||||||
|
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|
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| COST OF REVENUES (Excluding depreciation stated below) |
||||||||
| Cost of revenue |
973,400 | 666,119 | ||||||
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|
|
|
|||||
| Total cost of revenue |
973,400 | 666,119 | ||||||
| Gross Profit |
10,405,365 | 7,732,782 | ||||||
| OPERATING EXPENSES: |
||||||||
| Sales and marketing |
683,841 | 1,019,498 | ||||||
| General and administrative expenses |
577,539 | 5,499 | ||||||
| Loss on change in fair value of debt |
1,445,229 | 333,879 | ||||||
| Unrealized loss (gain) on investments |
(672,936 | ) | 1,039,022 | |||||
| Depreciation |
1,098 | 1,098 | ||||||
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|
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|
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| Total operating expenses |
2,034,771 | 2,398,996 | ||||||
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| Operating Income |
$ | 8,370,594 | $ | 5,333,786 | ||||
|
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|
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| OTHER INCOME (EXPENSE) |
||||||||
| Interest (expense) |
(584,075 | ) | — | |||||
| Interest income |
— | — | ||||||
| Other income (expense) |
121,601 | (127,455 | ) | |||||
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|
|||||
| Total other income (expense) |
(462,474 | ) | (127,455 | ) | ||||
| Net income before provision for income taxes |
7,908,120 | 5,206,331 | ||||||
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| (Provision for)/Benefit from income taxes |
(1,184,571 | ) | (120,132 | ) | ||||
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|
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| NET INCOME |
6,723,549 | 5,086,199 | ||||||
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| LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST |
(26,596 | ) | 406,641 | |||||
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| NET INCOME ATTRIBUTABLE TO SHAREHOLDERS |
6,750,145 | 4,679,558 | ||||||
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ABACUS SETTLEMENTS, LLC
Condensed Consolidated Statement to Operations
| Three Months Ended June 30 |
||||||||
| 2023 | 2022 | |||||||
| Origination revenue |
$ | 2,745,339 | $ | 743,388 | ||||
| Related party revenue |
4,139,351 | 4,948,528 | ||||||
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| Total revenue |
6,884,690 | 5,691,916 | ||||||
| Cost of revenue |
2,407,021 | 956,625 | ||||||
| Related party cost of revenue |
2,490,959 | 2,615,307 | ||||||
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|
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| Total cost of revenue |
4,897,980 | 3,571,932 | ||||||
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| Gross Profit |
1,986,710 | 2,119,984 | ||||||
| OPERATING EXPENSES: |
||||||||
| General and administrative expenses |
2,297,577 | 2,208,051 | ||||||
| Depreciation |
2,561 | 3,048 | ||||||
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|
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| Total operating expenses |
2,300,138 | 2,211,099 | ||||||
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|
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| Income (Loss) from operations |
(313,428 | ) | (91,115 | ) | ||||
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| OTHER INCOME (EXPENSE) |
||||||||
| Interest income |
1,193 | 599 | ||||||
| Interest (expense) |
(5,863 | ) | — | |||||
| Other income |
— | 273 | ||||||
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|
|
|
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| Total other income (expense) |
(4,670 | ) | 872 | |||||
| Income (Loss) before income taxes |
(318,098 | ) | (90,243 | ) | ||||
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|
|
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| Provision for income taxes |
— | — | ||||||
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| NET INCOME (LOSS) AND COMPREHENSIVE |
$ | (318,098 | ) | $ | (90,243 | ) | ||
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|||||
| WEIGHTED-AVERAGE UNITS USED IN COMPUTING NET INCOME (LOSS) PER UNIT: |
||||||||
| Basic |
$ | 400 | 400 | |||||
| Diluted |
$ | 400 | 400 | |||||
| NET INCOME/(LOSS) PER UNIT: |
||||||||
| Basic earnings per unit |
$ | (795.25 | ) | $ | (225.61 | ) | ||
| Diluted earnings per unit |
$ | (795.25 | ) | $ | (225.61 | ) | ||
See accompanying notes to interim condensed consolidated financial statement
PROFORMA COMBINED (ABACUS LIFE, INC. AND ABACUS SETTLEMENTS, LLC)
Condensed Consolidated Statement of Operations
| Q2 2023 | Q2 2022 | Increase | % Increase | |||||||||||||
| Revenue |
||||||||||||||||
| Origination Revenue |
6,884,690 | 5,691,916 | 1,192,774 | 21 | % | |||||||||||
| Portfolio & Servicing Revenue |
354,366 | 419,422 | (65,056 | ) | (16 | %) | ||||||||||
| Active Management Revenue |
11,024,399 | 7,979,479 | 3,044,920 | 38 | % | |||||||||||
|
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|
|
|
|
|
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|
|||||||||
| Total Revenue |
18,263,455 | 14,090,817 | 4,172,638 | 30 | % | |||||||||||
|
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|
|||||||||
| Cost of Revenue |
||||||||||||||||
| Origination Cost of Revenue |
4,897,980 | 3,571,932 | 1,326,048 | 37 | % | |||||||||||
| Portfolio & Servicing Cost of Revenue |
973,400 | 666,119 | 307,281 | 46 | % | |||||||||||
|
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|
|
|
|
|
|
|
|||||||||
| Total Cost of Revenue |
5,871,380 | 4,238,051 | 1,633,329 | 39 | % | |||||||||||
|
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|
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|
|
|
|||||||||
| Gross Profit |
12,392,075 | 9,852,766 | 2,539,309 | 26 | % | |||||||||||
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|
|
|||||||||
| Expenses |
||||||||||||||||
| Operating Expenses (Abacus & LMA) |
4,334,909 | 4,610,095 | (275,186 | ) | (6 | %) | ||||||||||
| Other (Income)/Expense |
467,144 | 126,583 | 340,561 | 269 | % | |||||||||||
| Income Tax Provision / (Benefit) |
1,184,571 | 120,132 | 1,064,439 | 886 | % | |||||||||||
| Non-Controlling Interest Income / (Loss) |
(26,596 | ) | 406,641 | (433,237 | ) | (107 | %) | |||||||||
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|
|
|||||||||
| Net Income |
6,432,047 | 4,589,315 | 1,842,732 | 40 | % | |||||||||||
|
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|||||||||
| EBITDA |
8,833,118 | 6,619,991 | 2,213,127 | 33 | % | |||||||||||
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|||||||||
| Capital Deployed through Abacus |
59,764,389 | 31,809,025 | 27,955,364 | 88 | % | |||||||||||
| 3rd Party Capital Deployed through LMA |
20,638,467 | 46,274,631 | (25,636,164 | ) | (55 | %) | ||||||||||
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|||||||||
| Total Capital Deployed |
80,402,856 | 78,083,657 | 2,319,199 | 3 | % | |||||||||||
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