SWKH - Earnings call transcript Q3 2024 | SWK Holdings Corporation

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Operator

Greetings. Welcome to the SWK Holdings Third Quarter 2024 Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Ira Gostin, Investor Relations.

You may begin.

Ira M. Gostin

thank Financial joining and and Third SWK everyone, XXXX Quarter Corporate morning, you the for Holdings Good Results Call. a months XXXX. issued for SWK press its detailing Yesterday, financial the X ending XX, September release results section The press found under be release News section. of Investor Release in the swkhold.com the can Relations

like our including call, expectations, certain following forward-looking regarding current about expectations make allocation our should and future statement operations future statements will regarding are beginning these today's to we our strategy, making Before forward-looking resources. events cash on be not on statements circumstances expectations, capital and These reliance our plans, about and I would the you statements. statements. Today, place statements based undue and

risks the filed we detailed Holdings and uncertainties, contained statements, otherwise. Actual whether obligation time may future other as SEC SEC information, results including these from to Risk forward-looking update Holdings or time. XX-K section to result our in new of with SWK of the with the a filings and SWK differ materially make to in any Factors those events disclaims information due

an Joining XXXX. on me Holdings call provide today's Jody SWK's President from and will who Third on Staggs, quarter CEO, is SWK update

Jody, ahead. please go

Jody Staggs

for Thank quarter joining you, thanks, Ira, conference and everyone, third our call.

and last SWK to Before He he praying family call. so the Adam, Adam family Rice, in we had on entire call. on you our night, that and be about a wanted start, on family is be was and the the I the today. CFO, acknowledge will for scheduled call the to death thinking not your speak

market product do to are a on innovative loans lien competitors as call. commercial first a investments. the segment SWK's million is and to core we believe royalties opportunities. stage underserved life our many million $X remains is on financing of science focused companies This Turning larger with $XX focus term business

and expertise and underwriting, and for the capabilities portfolio over documentation a We management. have this market of segment financed in have decade origination,

net During gross $XXX segment receivables quarter, increased finance portfolio non-GAAP The income. our adjusted to of the finance third year-over-year core million. generated $X XX%

points XX.X% the The yield with increased was as our $XX third quarter to year-over-year million XX revenue our The effective accompanied XX.X%, to yield. due an line to in to the average. yield loans. historical approximately Segment $X than realized by as year-over-year improved our XX.X% in grow -- receivables nonaccrual a less effective yield million realized increase portfolio basis

our we trend yield our effective in developments the yield. our positive bucket, historical exceeding of approximating expect or nonaccrual realized Given revert to should

third Relief. to and monetization During closed we up $X.XX the quarter, an $XX million advanced Therapeutics, have to royalty with million we Relief

the quarter, During million Eton's upsized support million year-end, is stated close also product. we by the Eton of disease deal a has to to will publicly rare to we Eton fund. a expected which at acquisition $XX time $XX a amendment closed Pharmaceuticals expect

value of Upon the XXX,XXX warrants signing dilutive the also our demonstrating the announced, SWK's value since $X.XX Eton solutions. price. minimally approximately of warrants a the was deal doubled amendment, of we Shares approximately strike Eton increasing have but at financing received

an to capital year-end, better. advancing discussing rated X multiple are existing loan to currently Medtech we or $X and closing we sponsor-backed now and Between a anticipate additional million borrowers CDMO, term

equity MOIC During to a XX% the third to and own loan full. IRR quarter, continue repaid in generated and our we The Epica. Epica X.X% was loan in a

$XX.X on of At finance X/XX, nonaccrual. million had we receivables

February $X.X sold On software SWK close, However, out to to we million XXXX. received its expects XX, close and million nonaccrual company. a post assets X Exeevo working $X.X November progress quarter cash made receive have in names. at

with January January payment owner contingent vendor. a is on X $XXX,XXX new X, receiving agreement anticipate also the executing XXXX, new existing this We -- approximately by although key an

X-year financials, consisting the a at in carrying XX. the accounting receive fourth the also to the the for this there SaaS quarter worked We XX% transaction SWK through our September increase as million but of value not $X.X of of gross will impairment an annual time, margin. in earn-out do is believe we

auction our to international Turning On held bidder to parties the timely won was with all-cash other close interested was believe and debtor to assets as an working not $XX.X estate. with time, will the transaction this the do the BIOLASE. million through XX, million. are fluid, of September BIOLASE for of work by November an SWK we X, orderly of an accounting and our But The an and the situation and purchase $XX.X third-party bid in fourth facilitate and impairment wind the for at the we of XXXX. value there's financials. down remains quarter attorneys carrying

to there September anticipate XX, believe not Turning in receiving proceeds of XXXX. repayment value facility to the of an We towards is months, loan. of the couple carrying next the $X.X the million as we do Trio impairment

against high, XXXX. our executing new segment support further things Fourth revenue is this should to are bookings which growth the with an out, round at plan revenue division all-time To quarter-to-date doubling Enteris quarter. $XXX,XXX business quarter in

inhaled with are is with it and making nasal our pleased progress as works a transition Phase and to strategic Enteris I We Phase CDMO. leading to partner the II

SWK our return book life quarter capital count, the portfolio commitments end based the Post to and growth per and and We our in drawn, term made In share progress XX% to on on tangible into diluted on will beyond. high. reduction combined and of forward. improve these with summary, an bucket, deploy value being close, and near unfunded science capital going expect believe we loans XXXX actions, we nonaccrual we considerable goal all-time share closings anticipated the continue with year near-term to achieve royalties attractive our our which positions in

questions. With that, let's to open call the

Operator

Scott your And question private Instructions] a today first from for [Operator investor. is Jensen,

Unknown Shareholder

condolences to like my his to Adam I'd on pass and family.

to caps the and in horse stocking the played well, that the and up the get small go think kind in outbid especially at for then was So you've least played I end. a with year tough of hand even watch fun coming BIOLASE

So well-played be to the that at end. down turned out a doubling

deal, for of thing that was done Eton, guys same of The good congratulations. job and capital a you a great So as outside well. raising they've

like So it really to That was direction. one my Thank for update. going in Enteris going it's questions. you be a of good the seems

So I appreciate that.

I guess one of help we can't but things the ripping. a Obviously, that market notice. will stock I got

big We have time. a exit stock it when just decide think I long to position, partly to muddles takes along. clearly, that's And due the shareholders

if process clearly, you of continuing speak. unload to as so get in doesn't making it stock reflected the probably good is unloading have the another even And we And one though progress, price. you're in and

down then of what the offices would last the and so to, room, it game down about shrinking call goes largest information shareholder And to year it their the Carlson's that the We goes. shutting I elephant public kind all assets. how over worldwide the know in

the their one is positions have. of read SWK they you If XX-F, largest that

just which out all And has with but one buyback, clearly could, can't if guys a Carlson's any same through whether approach thought be in Carlson way, them. position. of going as Board have be the we'd so It I dominating nice wondered position from stock bigger then shareholder. you buy they're reached kind in at you the And about how to gone ideas,

know reveal how see clearly, their there's they read a event, more just thought say? this hand, not to end. possible the list may we But because you responses known some to Just reactions upcoming it. can wondering, than so any board shall this about it I And approach you of whether movement have about don't their through thoughts filings, on there's has to or can the probably

Jody Staggs

mean I that for Yes. is question. No, the thanks the question.

me fluid think we look of better. still levels. with we to we've said, enter We -- an those the through now assets. yields like cases. are think. nonaccruals. good And could revert there. the We as kind quick all-time in let up again, we had of and should now a those. take portfolio where assuming back. We'll This feel to get -- play couple there's step terms We is cash XXXX situations of Just flow about pretty year, or approximately breakeven things We out some we Enteris a in be think high historical are had

that this earn double-digit business and a ROE. think look think So a we at should we that, is we

worked have -- big a for do out, time, the that mandate we shares a can But ROE may And attempted is to back earn that got point grow business companies sophisticated value. frustrated. folks. we focus stock know so buy had We some They at discount, and Enteris to do And at portfolio we've new -- the the we're I will Board. when the could, X-person everyone trade as that a initially regular working as understands this. having finance we team if -- the not that. ROE. enough. we've calls. We're address key Board that. plans We're say book should like get trading we to situation, past this are frustrated, through then And is aggressively potential show very to Historically, they're acknowledge and earn These be a double-digit a bit simplify board. at you are and in in, came this a also

figured and XXX%, my get that so are other and working this. marching -- is focused will I of orders terms out. to they team this the you this tell In on with folks

bit little generating cleaned to We at more we're that be the that particularly up to a should portfolio, think yields attractive somebody. continue the

of shareholders, In a filing fair have see sold terms amount. one of our the did that down shareholders I our larger

we are can we those as program. has So of not to shares as helped. that buy through much back probably But our trying

Unknown Shareholder

bit you buyback? are Do they just more could little they That's your a I could know Trading. be it effective of they aware position? where that at they mean Jones Jones call out , getting do

Jody Staggs

are can't in I particular. These that to sophisticated Yes. folks. speak

traffic these securities. that -- small of So and types

I than So to this. open period up. We're I'm XXx an sell, call wants if more knowledgeable me on now. in they're me say sure anyone will

those have conversations. happy to So

out I my and figure discuss I'm think those. phones can we Happy something direct. e-mail to sure posted.

discount, us they're And but you like mean, with trading sophisticated happy is at our way price, can't or the the imagine shareholders what pricing doing with figure terms try us stock I none that's business to shareholder, of the largest are. well. this I think to speak happy asset a an think They're thinking they're speak In out with all specifically, large seeing who's obviously to investor performing. our as I of I not would they're regularly. of I any which really

Operator

today Group. for with Your question next from Maxim Michael is Diana

Michael Diana

that Okay. Jody, different Or -- the What at is when you just million? $XXX is portfolio talk all-time that number? about a high.

Jody Staggs

really that think my the on in fourth that have could we probably -- the as quarter, guidance, based on an into don't one it's high. be that's to again, could to have the pro ] I year-end. end forma clean repayment, we place, [ -- things Well language, we want upsize, would at all-time probably commitments but been. I I give think if do to with -- including but we fall all-time but close and an based I sort we -- Some high as tied should Eton end there's need say of near my year the

Michael Diana

of Yes. sorts But what asking. all I It it. high, No, I'm that's all-time is understand what depends your payoffs and on things.

Jody Staggs

we start I mid-XXXs. the fairly X this We a did sure I'm around okay, were this so in -- doing gross believe we is -- basis. on were

pull here in me. of I right it me because this do up front have Let

XXXX. basis a of in So quarter That was $XXX we million. the our That above fourth all-time $XXX we were gross were quarter at only high. on was million

Michael Diana

got Yes, you. I

impairment. And on in statement income provision through Okay. come the line the cleaning up quarter going the Is that to fourth [indiscernible] the then or nonaccruals.

impairment. because about me you reiterate Let talked

there's no Let's impairment. assume

Jody Staggs

Yes. that's Yes. That's -- right.

way that. again, or let's CECL this quarter for our ago, methodology. a now, to X last we commitment quarters and changed that we the maybe But assume so So reserve not is

And we I higher sense. a reserve credits, have of against a which think so lower-rated makes lot intuitively now

example, our So XX%. get credits as X-rated an reserved at

at $X.X That against a So X-rated million Exeevo we had the quarter. means a reserve a it. BIOLASE loan $XX.X credit. was million was

at loan the it was So quarter. million $X.X a

$XXX,XXX reserve CECL we a had against So roughly that.

to Again, and if that's But how work able that is we yes, all going we're works. get money our -- committing that offset to to out that those, So reverse well would not I'm earnings. functionally, also that saying it or on we into yes, that not CECL things be that. back reserve

was like X.X. it's Exeevo Sorry, times XX% $XXX,XXX,

Michael Diana

that's credits, because Okay. you provision, to these And Is lead of if then do a CECL. new close that right? going to right,

Jody Staggs

Okay.

CECL So reserve will is we're the our way X% X-rated doing is existing on against setup loan new an a it. seasoned, have that we

a X-rated take is that. case reserve Eton, and not So CECL of loan will to it's in have the it against seasoned, we a

is positive. that a So

loan, new we new it loans. is any X.X% reserve against a if do take Now X-rated

assuming So reserve. take a million $X we as that a to like have $XXX,XXX CECL example, -- an loan, this close we'll what's

So I and yes, quite higher-rated we're we're CECL there's think low-rated credits, credits. ahead some reserving puts a and bit is methodology better new reserving on takes. of on less our where But time

Michael Diana

Right. yield the to And resolution said right? of because the yield, approach you your realized nonperformers, of up go should you're effective

Jody Staggs

that's right. think I

can and we be is if of envelope look that But about nonaccruals, let's going this just at So money $XXX math. that effective roughly I the $X to million. have put a our out assume if call just million income. base. X $XX -- I'm would that we it at And roughly annual And yield, equity million

the yield. -- about should points. our over increase would portfolio that basis doing be XXX that, by see can you points that realized XXX So I

realized effective that goes to yield closer up yield. So the

Operator

from for question private is William next investor. Koch, a today Your

Unknown Shareholder

Bill questions much is Actually, ask, going indicated. the me This and answers. were as before to I great what she just was Koch, they two are pretty

So couple things of that for if but you just it me, much I up second. a say would pretty to like a got sums

Jody Staggs

Absolutely, yes.

Unknown Shareholder

not lot criminal a guy. defense too. lawyer Connecticut, in and than guys, up a actually you I'm sophisticated I'm a Yes, I'm financial older

did say website. I thing that the love day. I to none one had going tie court I wear notice a every ties is have your So on, to to was that of guys I

because I and ago, great wow, in years before XX of think out. probably hear nasal it one the don't but was when good I'm a news and came the calcitonin like guys yes, So today Enteris a Enteris maybe -- And stock like, because I bought made quarter drug those and are their XX it's Unigene or picture. profit has

else about has that too. I everything cetera, stock mean, good price, been But the was answered. was news, thinking otherwise, So et I

tuned. guess I So stay I'll

So hang in there us guys, little for too.

Jody Staggs

Absolutely. Yes.

Bill. of shareholders appreciate and We support, your our are working all for

Operator

question from Jensen, Scott investor. next private Your for a today is

Unknown Shareholder

Jody, financing the the relate that a you reserved? how did DIP $XX.X on follow-up does just When BIOLASE. the you October, in million that have to

Jody Staggs

Yes.

the at at additional $XX.X so advance funded an So our was million close. GAAP We the quarter in third plus amount million we $X.X that X/XX the -- was quarter. mark after advanced

So you pro million. kind the think can like GAAP of $XX.X forma of mark of

Unknown Shareholder

the think you you're number $XX bidding you at to, plus because million referring And hope that's went obviously, that the you all...

Jody Staggs

to that commit We're would the saying I because to this people a that to think hands very appropriate at in want piggy still I their reserve is, committed what of But [indiscernible] that. don't I time, there's is Yes, doing mark think put the that we've CECL lot comfortable we plus banks. our and feel best -- the

Unknown Shareholder

Yes.

of within in Is and the guidelines be a everybody's down to of And as order line. if good it position so of now gives documents that? hands them end that to when a far clearly, Do that court even way you and comes some... as supposed the bankruptcy kind pecking get write got their back feel kind to at like they're the the it jar, you in your you the rules way

Jody Staggs

frame -- way. mean would I this Yes, I it

documents lender great. fine. asset We're an secured senior Our lien. with are a They're all

So we've And got in not have points But folks of these various expert. I'm that. a leverage bankruptcy situations.

unsecured may you creditors actually But Bill. like He talking things start more about about know talk it. might You to committees.

You being like payables go that start certain maybe talking about forward.

fees. professional about talking start You

don't constantly do that so keep it want have thing get trying open and we of so for you're -- move And weeks. on math closed gosh, can to this the just to we to do we

or need we give these do so people not. to And

great. sort But our how fight. time that hard you of line So are of docs there's

is lean fine. Our

great. is structure Our

that's good. So all

Unknown Shareholder

was hedge Yes. a It's it had learning next of way. things. pleasure a to our hedge those credit in and working fund them and to fund -- the next to I just equity fund my eyes opened listening -- large of kind

come play. into So things that clear cut understand I not be so clearly might

best of Well, So -- on good. that. luck

Operator

the end of for will remarks. turn I call the now over have Jody session, question-and-answer We and reached to the closing

Jody Staggs

to if everyone, further. wants everyone Thank discuss I hope out, you anyone has and that, for I the quarter joining happy And day. available am for Great. Thanks, support. great with Bye-bye. reach the SWK the call. a to

Operator

and conference, for Thank your participation. you lines today's this you disconnect concludes time. This may your at

SWK (SWKH) 15 Nov 242024 Q3 Earnings call transcript