swkh-20250930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2025

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-39184

SWK Holdings Corporation

(Exact Name of Registrant as Specified in its Charter)


Delaware			77-0435679
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

5956 Sherry Lane, Suite 650
Dallas, TX			75225
(Address of Principal Executive Offices)			(Zip Code)

(Registrant’s Telephone Number, Including Area Code): (972) 687-7250

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

SWKH

The Nasdaq Stock Market LLC

9.00% Senior Notes due 2027

SWKHL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer o

Accelerated Filer o

Non-Accelerated Filer x

Smaller Reporting Company x

Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

As of October 31, 2025, there were 12,095,906 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

SWK Holdings Corporation

Form 10-Q

Quarter Ended September 30, 2025

Table of Contents


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Unaudited Condensed Consolidated Balance Sheets—September 30, 2025 and December 31, 2024	1

	Unaudited Condensed Consolidated Statements of Income—Three and Nine Months Ended September 30, 2025 and 2024	2

	Unaudited Condensed Consolidated Statements of Stockholders' Equity—Three and Nine Months Ended Sep tember 30, 2025 and 2024	3

	Unaudited Condensed Consolidated Statements of Cash Flows— Nine Months Ended September 30, 2025 and 2024	5

	Notes to the Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4	Controls and Procedures	37

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Mine Safety Disclosures	38

Item 5.	Other Information	38

Item 6.	Exhibits	39

	Signatures	41

FORWARD-LOOKING STATEMENTS

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, we may also provide oral or written forward-looking statements in other materials we release to the public. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. The forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, and our beliefs and assumptions, and include, but are not limited to, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Words such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “should,” “will” and variations of these words and similar expressions identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially (both favorably and unfavorably) from those expressed or forecasted in the forward-looking statements.

These risks and uncertainties include, but are not limited to, those described in Item 1A, “Risk Factors,” those described in Item 1A. "Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, and elsewhere in this report. Forward-looking statements that were believed to be true at the time made may ultimately prove to be incorrect or false. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)


	September 30, 2025		December 31, 2024
Assets:
Current assets:
Cash and cash equivalents	$	10,206	$	5,927

Interest, accounts receivable and other receivables, net	5,581		5,788

Assets held for sale, net (Note 4)	—		6,398

Other current assets	543		2,141
Total current assets	16,330		20,254

Finance receivables, net of allowance for credit losses of $7,740 and $11,249 as of September 30, 2025 and December 31, 2024, respectively	245,396		277,760
Collateral on foreign currency forward contract	—		2,750
Marketable investments	275		580
Deferred tax assets, net	19,330		23,484
Warrant assets	7,599		4,366


Other non-current assets	432		3,041
Total assets	$	289,362	$	332,235

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable and accrued liabilities	$	2,874	$	2,810
Liabilities held for sale (Note 4)	—		1,255
Deferred income	—		1,500
Total current liabilities	2,874		5,565


Unsecured senior notes, net	31,921		31,412
Revolving credit facility	—		6,233
Other non-current liabilities	361		335
Total liabilities	35,156		43,545

Commitments and contingencies (Note 7)

Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock $0.001 par value; 250,000,000 shares authorized; 12,095,979 and 12,213,599 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively	12		12
Additional paid-in capital	4,417,730		4,419,991
Accumulated deficit	(4,163,536)		(4,131,313)
Total stockholders' equity	254,206		288,690
Total liabilities and stockholders' equity	$	289,362	$	332,235

See accompanying notes to the unaudited condensed consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Revenues:
Finance receivable interest income, including fees	$	10,822	$	9,498	$	30,077	$	30,519
Pharmaceutical development	—		628		2,153		1,711
Other	60		292		536		395
Total revenues	10,882		10,418		32,766		32,625
Costs and expenses:
Provision (benefit) for credit losses	(931)		1,385		(1,635)		10,777
Loss on impairment of intangibles assets	209		—		209		5,771
Loss on disposal of inventory	314		—		314		—
Interest expense	1,179		1,139		3,464		3,514
Pharmaceutical manufacturing, research and development expense	147		585		1,550		1,635
Change in fair value of acquisition-related contingent consideration	—		—		—		(4,900)
Depreciation and amortization expense	2		234		40		1,169
General and administrative expense	3,286		2,993		9,406		8,597
Income from operations	6,676		4,082		19,418		6,062
Other income (expense), net
Unrealized net gains on warrants	2,640		47		2,563		178
Net gain on exercise and cancellation of warrants	—		—		—		444
Loss on sale of assets	—		—		(82)		—
Gain on sale of business	1,601		—		1,601		—
Net loss on marketable investments	(246)		(6)		(314)		(168)
Realized gain on early payment of finance receivable	—		—		1,729		—
Gain (loss) on revaluation of finance receivables	—		—		(3,727)		2,495
Realized and unrealized foreign currency transaction gains (losses)	25		251		(113)		775
Income before income tax expense	10,696		4,374		21,075		9,786
Income tax expense	1,916		906		4,220		2,170
Net income	$	8,780	$	3,468	$	16,855	$	7,616

Net income per share
Basic	$	0.72	$	0.28	$	1.38	$	0.61
Diluted	$	0.72	$	0.28	$	1.38	$	0.61
Weighted average shares outstanding
Basic	12,117		12,318		12,184		12,417
Diluted	12,117		12,408		12,184		12,492

See accompanying notes to the unaudited condensed consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share data)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balances at December 31, 2024	12,213,599	$	12	$	4,419,991	$	(4,131,313)	$	288,690
Stock-based compensation	—	—		307		—		307

Issuance of restricted common stock	61,260	—		—		—		—
Repurchases of common stock in open market	(52,337)	—		(867)		—		(867)
Net income	—	—		—		4,539		4,539
Balances at March 31, 2025	12,222,522	12		4,419,431		(4,126,774)		292,669
Stock-based compensation	—	—		301		—		301

Issuance of restricted common stock	11,574	—		—		—		—
Repurchases of common stock in open market	(58,954)	—		(870)		—		(870)
Cash dividends ($4.00 per share)	—	—		—		(49,078)		(49,078)
Net settlement for employee taxes on stock options	—	—		(89)		—		(89)
Stock options exercised, net	8,764	—		—		—		—
Net income	—	—		—		3,536		3,536
Balances at June 30, 2025	12,183,906	12		4,418,773		(4,172,316)		246,469
Stock-based compensation	—	—		286		—		286


Repurchases of common stock in open market	(87,927)	—		(1,329)		—		(1,329)


Net income	—	—		—		8,780		8,780
Balances at September 30, 2025	12,095,979	$	12	$	4,417,730	$	(4,163,536)	$	254,206


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balances at December 31, 2023	12,497,770	$	12	$	4,425,104	$	(4,144,801)	$	280,315
Stock-based compensation	—	—		111		—		111
Issuance of restricted common stock	48,918	—		—		—		—
Forfeiture of unvested restricted stock	(6,446)	—		—		—		—
Repurchases of common stock in open market	(58,298)	—		(999)		—		(999)
Net income	—	—		—		468		468
Balances at March 31, 2024	12,481,944	12		4,424,216		(4,144,333)		279,895
Stock-based compensation	—	—		249		—		249
Issuance of restricted common stock	17,323	—		—		—		—
Net settlement for employee taxes on stock options	—	—		(43)		—		(43)
Stock options exercised, net	2,595	—		—		—		—
Repurchases of common stock in open market	(54,667)	—		(950)		—		(950)
Net income	—	—		—		3,680		3,680
Balances at June 30, 2024	12,447,195	12		4,423,472		(4,140,653)		282,831
Stock-based compensation	—	—		348		—		348
Issuance of common stock	7,123	—		—		—		—
Repurchases of common stock in open market	(190,336)	—		(3,216)		—		(3,216)
Net income	—	—		—		3,468		3,468
Balances at September 30, 2024	12,263,982	$	12	$	4,420,604	$	(4,137,185)	$	283,431

See accompanying notes to the unaudited condensed consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)


	Nine Months Ended September 30,
	2025		2024
Cash flows from operating activities:
Net income	$	16,855	$	7,616
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (benefit) for credit losses	(1,635)		10,777
Loss on sale of assets	82		—
Loss on impairment of intangible assets	209		5,771
Right-of-use amortization and cease use costs	143		339
Amortization of debt issuance costs	850		775
Deferred income taxes, net	4,156		2,100
Unrealized net gain on warrants	(2,563)		(178)
Loss on disposal of inventory	314		—
Net gain from exercise and cancellation of warrants	—		(444)
Gain on sale of business	(1,476)		—
Change in fair value of acquisition-related contingent consideration	—		(4,900)
Loss (gain) on revaluation of finance receivables	3,727		(2,495)
Foreign currency transaction gains	(639)		(678)
Loss on marketable investments	314		168
Loan discount amortization and fee accretion	(5,961)		(2,461)
Interest paid-in-kind	(1,582)		(1,359)
Stock-based compensation	894		708
Depreciation and amortization expense	40		1,169
Changes in operating assets and liabilities:
Interest, accounts receivable and other receivables	207		(1,691)
Foreign currency forward contract	915		219
Collateral returned for foreign currency forward contract	2,750		—
Other assets	1,274		30
Accounts payable, accrued expenses, and other non-current liabilities	(387)		(1,406)
Deferred income	(1,500)		2,100
Net cash provided by operating activities	16,987		16,160

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)


	Nine Months Ended September 30,
	2025		2024
Cash flows from investing activities:
Proceeds from sale of property and equipment	110		—
Settlement of foreign currency forward contract	1,560		—
Proceeds from sale of assets and liabilities held for sale	6,790		—
Sale of marketable investments	—		574
Investment in finance receivables	(28,500)		(17,736)
Proceeds from sale of finance receivables	31,678		—
Repayment of finance receivables	34,651		30,582
Corporate debt securities principal payments	23		20
Purchases of property and equipment	(512)		(50)
Net cash provided by investing activities	45,800		13,390

Cash flows from financing activities:
Net settlement for employee taxes on stock options	(89)		(43)
Net payments on credit facility	(6,233)		(12,350)
Cash dividends	(49,078)		—
Payments of financing costs	(41)		(50)
Repurchases of common stock, including fees and expenses	(3,067)		(5,165)
Net cash used in financing activities	(58,508)		(17,608)

Net increase in cash and cash equivalents	4,279		11,942
Cash and cash equivalents at beginning of period	5,927		5,236
Cash and cash equivalents at end of period	$	10,206	$	17,178

Supplemental non-cash investing and financing activities:
Fair value of warrants received with finance receivables	$	—	$	1,073
Cash paid for interest	$	2,259	$	2,403

Derecognition of right-of-use assets and operating lease liabilities upon termination of lease	$	—	$	82

See accompanying notes to the unaudited condensed consolidated financial statements.

SWK HOLDINGS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. SWK Holdings Corporation and Summary of Significant Accounting Policies

Nature of Operations

SWK Holdings Corporation (the “Company,” “we,” or “us”) was incorporated in July 1996 in California and reincorporated in Delaware in September 1999. In July 2012, we commenced a strategy of building a specialty finance and asset management business. In August 2019, we commenced a complementary strategy of building a pharmaceutical development, manufacturing and intellectual property licensing business. Our operations were comprise of two reportable segments: “Finance Receivables” and “Pharmaceutical Development.” As a result of the sale of substantially all assets of the Pharmaceutical Development segment, the Finance Receivables segment will be the only remaining operating segment as of September 30, 2025. We evaluate and invest in a broad range of healthcare related companies and products with innovative intellectual property, including the biotechnology, medical device, medical diagnostics and related tools, animal health and pharmaceutical industries (collectively, “life sciences”). We allocate capital within our finance receivables portfolio in order to generate income through the sales of life science products by third parties and related earned income sources. The Company is headquartered in Dallas, Texas, and as of September 30, 2025, the Company had 9 full-time employees.

The Company has net operating loss carryforwards (“NOLs”) and believes that the ability to utilize these NOLs is an important and substantial asset.

As of October 31, 2025, the Company and its partners have executed transactions with 58 different parties under its specialty finance strategy, funding an aggregate of $871.6 million in various financial products across the life science sector. The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic royalties paid by companies in the life science sector, and purchased royalties generated by sales of life science products and related intellectual property.

During 2019, we commenced our Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc. (“Enteris”). As of March 13, 2025 the Company changed the name of Enteris to MOD3 Pharma ("MOD3"). MOD3 is a clinical development and manufacturing organization providing development services to pharmaceutical partners. MOD3 seeks to generate income by providing customers pharmaceutical development, formulation and manufacturing services.

With an effective date of April 21, 2023, we entered into a collaboration agreement with AptarGroup, Inc ("Aptar") under which we would be the exclusive provider of certain contract development and manufacturing organization ("CDMO") services to its customers. Fee revenue generated as a result of this agreement is presented as pharmaceutical development revenue on the unaudited condensed consolidated statements of income and is accounted for in accordance with our revenue recognition policy as described under Revenue Recognition below.

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of all subsidiaries and affiliates in which the Company holds a controlling financial interest as of the financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. The Company consolidates a variable interest entity (“VIE”) when it possesses both the power to direct the activities of the VIE that most significantly impact its economic performance and the Company is either obligated to absorb the losses that could potentially be significant to the VIE or the Company holds the right to receive benefits from the VIE that could potentially be significant to the VIE, after elimination of intercompany accounts and transactions.

The Company owns interests in various partnerships and limited liability companies, or LLCs. The Company consolidates its investments in these partnerships or LLCs where the Company, as the general partner or managing member, exercises effective control. Even though the Company’s ownership may be less than 50%, the related governing agreements provide the Company with broad powers, and the other parties do not participate in the management of the entities and do not effectively have the ability to remove the Company. The Company has reviewed each of the underlying agreements to determine if it has effective control. If circumstances change and it is determined this control does not exist, any such investment would be recorded using the equity method of accounting. Although this would change individual line items within the Company’s consolidated financial statements, it would have no effect on its operations and/or total stockholders’ equity attributable to the Company.

Reclassification of Prior Period Amounts

Certain prior period financial information has been reclassified to conform to current period presentation.

Unaudited Interim Financial Information

The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2025. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 20, 2025.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition; stock-based compensation; valuation of interest and accounts receivable; allowance for credit losses; valuation or impairment of long-lived assets; property and equipment; intangible assets; valuation of warrants and other investments; income taxes; and contingencies and litigation, among others. Some of these judgments can be subjective and complex, and consequently, actual results may differ from these estimates. The Company’s estimates often are based on complex judgments, probabilities and assumptions that it believes to be reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are reasonable.

The Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic environment. As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause changes to those estimates and assumptions. Market conditions, such as illiquid credit markets, health crises, volatile equity markets, and economic downturns, can increase the uncertainty already inherent in the Company’s estimates and assumptions. The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant accounting standard. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Segment Information

The Company earns revenues from its two U.S.-based business segments: its specialty finance and asset management business offering customized financing solutions to a broad range of life-sciences companies, and its business offering clinical development and manufacturing services to pharmaceutical partners.

Revenue Recognition

The Company’s Pharmaceutical Development segment enters into collaboration and licensing agreements with Aptar, under which it may exclusively license rights to research, develop, manufacture and commercialize its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, upfront license fees; reimbursement of certain costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred income in the Company’s condensed consolidated balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current deferred income. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred income, net of current portion.

Intangible Assets

As of December 31, 2024, net book value of intangible assets of $0.2 million is included in assets held for sale. There was no amortization expense related to intangible assets during the three and nine months ended September 30, 2025. Amortization expense was $0.5 million for the nine months ended September 30, 2024. Amortization expense for the three months ended September 30, 2024 was immaterial.

Research and Development

Research and development expenses include the costs associated with internal research and development and research and development conducted for the Company by third parties. These costs primarily consist of salaries, pre-clinical and clinical trials, outside consultants, and supplies. All research and development costs discussed above are expensed as incurred. Third-party expenses reimbursed under research and development contracts, which are not refundable, are recorded as a reduction to pharmaceutical manufacturing research and development expense in the unaudited condensed consolidated statements of income.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update ("ASU") 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." The standard is intended to provide greater transparency in various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses." The ASU enhances disclosures related to income statement expenses to further disaggregate expenses in the footnotes to the consolidated financial statements. The standard requires disaggregation of any relevant expense caption presented on the face of the income statement that contains the following expense categories: purchases of inventory, employee compensation, depreciation (including amortization of leasehold improvements), intangible asset amortization, and depletion expense. Further, the standard requires disclosure of the total amount and the entity's definition of selling expenses. The ASU is effective for fiscal years beginning with its annual financial statements for the year ended December 31, 2027. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

Note 2. Net Income Per Share

Basic net income per share is computed using the weighted-average number of outstanding shares of common stock. Diluted net income per share is computed using the weighted-average number of outstanding shares of common stock, and when dilutive, shares of common stock issuable upon exercise of options and warrants deemed outstanding using the treasury stock method.

The following table shows the computation of basic and diluted net income per share for the following periods (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Numerator:
Net income	$	8,780	$	3,468	$	16,855	$	7,616

Denominator:
Weighted-average shares outstanding	12,117		12,318		12,184		12,417
Effect of dilutive securities	—		90		—		75
Weighted-average diluted shares	12,117		12,408		12,184		12,492

Basic net income per share	$	0.72	$	0.28	$	1.38	$	0.61
Diluted net income per share	$	0.72	$	0.28	$	1.38	$	0.61

There were no outstanding options to purchase shares of common stock for the three and nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, outstanding options to purchase shares of common stock in an aggregate of approximately 160,000 and 161,000, respectively, have been excluded from the calculation of diluted net income per share, as such securities were anti-dilutive.

Note 3. Finance Receivables

Finance receivables

Finance receivables are reported at their determined principal balances net of any unearned income, cumulative write offs charged against the allowance for credit losses, and unamortized deferred fees and costs. Unearned income and deferred fees and costs are amortized to interest income based on all cash flows expected using the effective interest method.

The carrying values of finance receivables were as follows (in thousands):


	September 30, 2025		December 31, 2024
Term loans	$	241,634	$	224,073
Royalty purchases	11,502		64,936
Total before allowance for credit losses	253,136		289,009
Allowance for credit losses	(7,740)		(11,249)
Total carrying value	$	245,396	$	277,760

Allowance for Credit Losses

The allowance for credit losses ("ACL") is management's estimate of the amount of expected credit losses over the life of the loan portfolio, or the amount of amortized cost basis not expected to be collected, at the balance sheet date. This estimate encompasses information about historical events, current conditions and reasonable and supportable economic forecasts. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. Given the current level of economic uncertainty, the complexity of the ACL estimate and level of management judgment required, we believe it is possible that the ACL estimate could change, potentially materially, in future periods. Changes in the ACL may result from changes in current economic conditions, our economic forecast, and circumstances not currently known to us that may impact the financial condition and operations of our borrowers, among other factors.

Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. For finance receivables that do not share similar risk characteristics with other finance receivables, expected credit losses are estimated on an individual basis. Expected credit losses are estimated over the contractual terms of the finance receivables, adjusted for expected prepayments and unfunded commitments, generally excluding extensions and modifications. The loan portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses.

The reserve for unfunded commitments is estimated using the same reserve or coverage rates calculated on collectively evaluated loans following the application of a funding rate to the amount of the unfunded commitment. The funding rate represents management's estimate of the amount of the current unfunded commitment that will be funded over the remaining contractual life of the commitment and is based on historical data. As of September 30, 2025 and December 31, 2024, the Company had $0.1 million of liabilities for credit losses on off-balance sheet exposures related to unfunded commitments with these liabilities included in accounts payable and accrued liabilities on the condensed consolidated balance sheets. Please refer to Note 7 for further information on the Company's unfunded commitments.

During the three months ended June 30, 2024, the Company revised its methodology for calculating the allowance for credit losses to be more directly tied to the individual risk ratings, as determined by management, of finance receivables. This resulted in a re-allocation of the existing allowance and did not have a material impact on the total allowance for credit losses amount. Previously, the Company's quarterly assessment of the allowance included two portfolio pools: Term Loans and Royalties. After the change in methodology these pools are further broken down into individual risk ratings applied to each investment to allow for a more precise method for calculating the allowance for credit losses.

The following table details the changes in the allowance for credit losses by Term Loans and Royalties (in thousands):


	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
	Term Loans		Royalties		Total		Term Loans		Royalties		Total
Allowance at beginning of period	$	7,158	$	4,091	$	11,249	$	9,731	$	4,170	$	13,901

Unfunded Commitments	(125)		—		(125)		—		—		—
Provision (benefit) for credit losses	(1,018)		(567)		(1,585)		10,202		575		10,777
Write offs	—		(1,799)		(1,799)		(10,335)		—		(10,335)
Allowance at end of period	$	6,015	$	1,725	$	7,740	$	9,598	$	4,745	$	14,343

Non-Accrual Finance Receivables

The Company originates finance receivables to companies primarily in the life sciences sector. This concentration of credit exposes the Company to a higher degree of risk associated with this sector.

On a quarterly basis, the Company evaluates the carrying value of its finance receivables. Recognition of income is suspended, and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. The Company would generally place term loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain and they are 90 days past due for interest or principal, unless the term loan is both well-secured and in the process of collection. When placed on nonaccrual, the Company would reverse any accrued unpaid interest receivable against interest income and amortization of any net deferred fees is suspended. Generally, the Company would return a term loan to accrual status when all delinquent interest and principal become current under the terms of the credit agreement.

The following table presents nonaccrual and performing finance receivables by portfolio pool, net of allowance for credit losses (in thousands) as of:


	September 30, 2025						December 31, 2024
	Nonaccrual		Performing		Total		Nonaccrual		Performing		Total
Term loans	$	—	$	241,634	$	241,634	$	1,000	$	223,073	$	224,073
Royalty purchases	11,502		—		11,502		13,830		51,106		64,936
Total before allowance for credit losses	$	11,502	$	241,634	$	253,136	$	14,830	$	274,179	$	289,009
Allowance for credit losses	(1,725)		(6,015)		(7,740)		(2,075)		(9,174)		(11,249)
Total carrying value	$	9,777	$	235,619	$	245,396	$	12,755	$	265,005	$	277,760

As of September 30, 2025, the Company had three finance receivables in nonaccrual status: (1) the Flowonix Medical, Inc. (“Flowonix”) royalty, with a carrying value of $6.6 million; (2) the Best ABT, Inc. (“Best”) royalty, with a carrying value of $2.3 million; and (3) the Ideal Implant, Inc. (“Ideal”) royalty, with a carrying value of $2.5 million. The Company collected $2.5 million and $2.6 million on its nonaccrual finance receivables for the nine months ended September 30, 2025 and 2024, respectively.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

The Company evaluates the carrying value of each finance receivable for impairment. A term loan is considered to be impaired when, based on current information and events, it is determined that the Company will not be able to collect the amounts due according to the loan contract, including scheduled interest payments. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. In certain circumstances, the Company may place a finance receivable on nonaccrual status but conclude it is not impaired. The Company may retain independent third-party valuations on such nonaccrual positions to support impairment decisions. On an ongoing basis, the Company monitors the performance of modified loans to their restructured terms.

Revaluation of Finance Receivables

On April 10, 2025, the Company completed the sale of the majority of its finance receivables segment royalty portfolio to Soleus Capital (“Soleus”) for approximately $34.0 million in cash ("the Transaction"), which approximated the fair value of those royalties. The amortized cost basis of the royalty portfolio was $37.7 million, inclusive of interest receivables of $2.3 million. As a result of the Transaction, the Company performed a lower-of-cost-or-market analysis in the aggregate resulting in a loss of $3.7 million which is included in the "Gain (loss) on revaluation of finance receivables" caption on the Company's unaudited condensed consolidated statements of income for the three and nine months ended September 30, 2025. In conjunction with the closing, the Company's Board of Directors declared a special cash dividend of $4.00 per share, payable to all holders of record of the Company’s common stock as of April 24, 2025, with a payment date of May 8, 2025.

During the three months ended June 30, 2024, the Company revalued its royalty for Iluvien as a result of entering into an amendment during the quarter. Pursuant to the amendment, the forecast of cash flows to be received over the life of the financial royalty was revised resulting in a revaluation gain of $2.5 million and corresponding mark-up to the carrying value which is included in the "Gain (loss) on revaluation of finance receivables" caption on the Company's unaudited condensed consolidated statements of income for the nine months ended September 30, 2024.

Credit Quality of Finance Receivables

The Company evaluates all finance receivables on a quarterly basis and assigns a risk rating based upon management’s assessment of the borrower’s ability and likelihood of repayment. The assessment is subjective and based on multiple factors, including but not limited to, financial strength of borrowers and operating results of the underlying business. The credit risk analysis and rating assignment is performed quarterly in conjunction with the Company's assessment of its allowance for credit losses. The Company uses the following definitions for its risk ratings for Term Loans:

1: Borrower performing well below Company expectations, and the borrower's ability to raise sufficient capital to operate its business or repay debt is highly in question. Finance receivables rated a 1 are on non-accrual and are at an elevated risk for principal impairment.

2: Borrower performing below plan, and the loan-to-value is generally worse than at the time of underwriting. Borrower has limited access to additional capital to operate its business. Finance receivables rated a 2 are generally on non-accrual, and while no loss of impairment is anticipated, there is potential for future principal impairment.

3: Borrower performing in-line-to-modestly below Company expectations, and loan-to-value is similar to slightly worse than at the time of underwriting. Borrower has demonstrated access to capital markets.

4: Borrower performing in-line-to-modestly above Company expectations and loan-to-value similar or modestly better than underwriting case. Borrower has demonstrated access to capital markets.

5: Borrower performing in excess of Company expectations, and loan-to-value is better than at time of origination.

The Company uses an internal credit rating system which rates each Royalty on a color scale of Green to Red, with Green typically indicative of a Royalty that is exceeding base underwritten case, Yellow indicates a royalty is performing in-line with underwritten plan, and Red reflective of underperformance relative to plan. Royalties rated as Red are generally classified as non-accrual.

The following table summarizes the gross carrying value of Finance Receivables by origination year, grouped by risk rating (in thousands):


	September 30, 2025
	2025		2024		2023		2022		2021		Prior		Total
Term Loans
5	$	—	$	29,644	$	—	$	19,623	$	16,409	$	—	$	65,676
4	14,594		8,049		39,550		22,987		—		—		85,180
3	—		—		20,033		27,372		—		23,037		70,442
2	—		—		5,923		—		14,413		—		20,336

Subtotal - Term Loans	$	14,594	$	37,693	$	65,506	$	69,982	$	30,822	$	23,037	$	241,634

Royalties


Red	—		—		—		—		2,522		8,980		11,502
Subtotal - Royalties	$	—	$	—	$	—	$	—	$	2,522	$	8,980	$	11,502

Total Finance Receivables, gross	$	14,594	$	37,693	$	65,506	$	69,982	$	33,344	$	32,017	$	253,136


	December 31, 2024
	2024		2023		2022		2021		2020		Prior		Total
Term Loans
5	$	—	$	—	$	—	$	16,378	$	—	$	28,926	$	45,304
4	7,929		36,406		55,353		—		—		—		99,688
3	—		24,920		—		11,930		—		26,482		63,332
2	—		—		—		14,749		—		—		14,749
1	—		—		—		—		—		1,000		1,000
Subtotal - Term Loans	$	7,929	$	61,326	$	55,353	$	43,057	$	—	$	56,408	$	224,073

Royalties
Green	$	8,005	$	11,685	$	11,231	$	—	$	15,865	$	1,267	$	48,053
Yellow	—		—		—		—		3,053		—		3,053
Red	—		—		—		3,050		8,433		2,347		13,830
Subtotal - Royalties	$	8,005	$	11,685	$	11,231	$	3,050	$	27,351	$	3,614	$	64,936

Total Finance Receivables, gross	$	15,934	$	73,011	$	66,584	$	46,107	$	27,351	$	60,022	$	289,009

Note 4. Acquisitions and Dispositions

MOD3 Exclusive Option and Asset Purchase Agreement

With an effective date of January 1, 2024, the Company entered into an Option and Asset Purchase Agreement (the "Option Agreement") with Aptar on March 14, 2024, which granted Aptar an exclusive option to acquire certain of MOD3 assets related to its business of providing contract development and manufacturing organizations ("CDMO") services to third parties, subject to certain exclusions. Aptar was required to exercise the Option by or before January 1, 2026. In exchange for the exclusive purchase option the partner provided consideration in the form of an "option fee" and "guaranteed revenue payments."

The option fee was broken into two components: A low-single digit million fee due within 30 business days of executing the agreement; and should the option not be exercised by the first anniversary of the effective date, an additional low-single digit million fee will be due at that time. The first option fee was paid in April 2024 and the second option fee was paid in February 2025. Option fee payments were included in deferred income until the earlier of term expiration or exercise of the purchase option. Upon the exercise of the purchase option, the option fee payments were applied towards the purchase price.

The guaranteed revenue payments included two components: A mid-single digit million guaranteed revenue payment in 2024 and a mid-single digit million guaranteed revenue payment in 2025. The revenue was to be derived by the partner under an existing collaboration agreement, and the partner was to pay the difference should the minimum amount not be met each year. Each year's guaranteed revenue amount is to be paid in two installments semi-annually each year. Should revenue exceed the 2024 or 2025 guaranteed revenue amounts after receiving a difference payment in the first half of the year, we would be required to repay the partner the amount of such overpayment. There was $0.2 million guaranteed revenue recognized during the three and nine months ended September 30, 2025 and $0.4 million guaranteed revenue recognized during the three and nine months ended September 30, 2024. As a result of the option being exercised the guaranteed revenue agreement was terminated.

On July 15, 2025, the Company, MOD3, and Aptar closed the asset purchase agreement (the "Purchase Agreement") for the sale and assignment of the assets to Aptar (the "sale of business") for an aggregate purchase price of approximately $6.9 million which includes cash previously paid by Aptar in accordance with the Option Agreement. For the three and nine months ended September 30, 2025, the Company recognized a net gain on sale of $1.6 million for the completion of the sale, which was inclusive of $3.3 million in option fees recognized as a component of the gain on sale. The gain was recognized in the "gain on sale of business" line item in our Condensed Consolidated income statement for three and nine months ended September 30, 2025. As a result of the option being exercised, Aptar's obligation to continue making guaranteed payments for the period following the closing of the sale of business was terminated.

As the Company expected Aptar to exercise the Option within 12 months from December 31, 2024, certain assets and liabilities of the MOD3 business were classified as held for sale as of December 31, 2024. The assets and liabilities held for sale as of December 31, 2024, represent the major operating assets and liabilities of the MOD3 business (i.e. the majority of the Pharmaceutical Development segment). The decisions to enter into the Option Agreement and the Purchase Agreement were made to align with the overall strategy to focus on the specialty finance business. In conjunction with the completion of the sale of MOD3 effective July 15, 2025, the Pharmaceutical Development segment will no longer exist and only the specialty Finance Receivable segment will remain for reporting periods beginning after September 30,2025.

The following table summarizes the assets and liabilities held for sale:


	December 31, 2024
Assets:
Inventory	$	354
Property & equipment, net	4,635
Intangible assets, net	209
Other non-current assets	1,200
Total assets held for sale, net	$	6,398

Liabilities:
Accounts payable & accrued liabilities	$	268
Other non-current liabilities	987
Total liabilities held for sale	$	1,255

During the nine months ended September 30, 2025 and the year ended December 31, 2024, there was not a strategic shift for the Company, and accordingly, the Pharmaceutical Development segment does not meet the criteria to be classified as a discontinued operation. As a result, we will continue to report our operational results for the Pharmaceutical Development segment. The following table shows the net loss before taxes for MOD3 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net income (loss) before taxes	$	660	$	(892)	$	144	$	(4,084)

Agreement and Plan of Merger

On October 9, 2025, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Runway Growth Finance Corp., a Maryland corporation (“Parent”), RWAY Portfolio Holding Corp., a Delaware corporation and a direct wholly owned subsidiary of Parent (“Intermediary Sub”), RWAY Portfolio Corp., a Delaware corporation and a direct wholly owned subsidiary of Intermediary Sub (“Acquisition Sub”), and Runway Growth Capital LLC, a Delaware limited liability company (“Parent External Adviser”).

Note 5. Marketable Investments

Investments in corporate debt and equity securities consist of the following (in thousands):


	September 30, 2025		December 31, 2024
Corporate debt securities	$	—	$	21
Equity securities	275		559
Total marketable investments	$	275	$	580

The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale debt securities are as follows (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

December 31, 2024	$	21	$	—	$	—	$	21

Equity Securities

On May 29, 2025, as part of an amendment to an existing term loan finance receivable agreement with Elutia, Inc ("Elutia") the Company received 50,000 shares of common shares with a fair value of $0.1 million, or $1.65 per share. Sale of the shares is restricted until maturity of the term loan finance receivable with Elutia.

On June 30, 2024, the Company exercised its right to purchase AOTI, Inc ("AOTI") common shares. Upon exercise, the Company received 402,634 shares of AOTI shares with a fair value of 0.7 million, or $1.68 per share.

The following table presents gains and losses on equity securities as prescribed by ASC 321, Investments - Equity Securities (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net gain (loss) on equity securities during the period	$	(246)	$	(6)	$	(314)	$	276
Net gain on warrants exercised or cancelled during the period	—		—		—		(444)
Net loss recognized on equity securities sold during the period	—		—		—		180
Unrealized gain (loss) on equity securities held at the end of the period	$	(246)	$	(6)	$	(314)	$	12

Note 6. Debt

Revolving Credit Facility

On June 28, 2023, the Company entered into a new credit agreement (the “Credit Agreement”) by and among SWK Funding LLC, the Company’s wholly-owned subsidiary (together with the Company, the “Borrower”), the lenders party thereto (“Lenders”), and First Horizon Bank as a Lender and Agent (the “Agent”). The Credit Agreement provides for a revolving credit facility with an initial maximum principal amount of $45.0 million. The Credit Agreement provides that the Company may request one or more incremental increases in an aggregate amount not to exceed $80.0 million, subject to the consent of the Agent and each Lender, at any time prior to the termination of the revolving credit period on June 28, 2026 (the “Commitment Termination Date”). The revolving credit period will be followed by a one-year amortization period, with the final maturity date of the Credit Agreement occurring on June 28, 2027.

The outstanding principal balance of the Credit Agreement will bear interest at a rate per annum equal to the sum of (i) Term Secured Overnight Financing Rate, or SOFR (as defined in the Credit Agreement) plus (ii) 3.75% at all times prior to the Commitment Termination Date. The outstanding principal balance of the revolving credit facility will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined in the Credit Agreement) plus (ii) 4.25% at all times on and after the Commitment Termination Date. Under the terms of the Credit Agreement, all accrued and unpaid interest shall be due and payable, in arrears, on the first business day of each calendar month.

The Credit Agreement contains customary affirmative and negative covenants, in addition to financial covenants specifying that, as of the end of each calendar month, (i) the consolidated leverage ratio of Borrower will not exceed 1.00 to 1.00, (ii) the consolidated interest coverage ratio of Borrower will not be less than 4.00 to 1.00, (iii) the cash collection rate in relation to Borrower’s portfolio of loan assets will not be less than 4.50% for such calendar month, (iv) the net charge-off percentage in relation to Borrower’s portfolio of loan assets will not exceed 3.00% for such calendar month, (v) the weighted average risk rating in relation to Borrower portfolio of loan assets will not be less than 3.00, and (vi) the Company's cumulative share repurchases will not exceed $5 million in value in any 12-month period. In addition, the Credit Agreement provides that at no time shall the Company permit its consolidated tangible net worth to be less than $145.0 million, or its liquidity (as defined in the Credit Agreement) to be less than $5.0 million. The Credit Agreement also contains events of default customary for such financings, the occurrence of which would permit the Agent and Lenders to accelerate the aggregate principal amount due thereunder.

On October 10, 2023, the Company entered into an amendment to the Credit Agreement pursuant to which Woodforest National Bank was added as a lender under the Credit Agreement for an aggregate commitment of $15.0 million, thereby increasing the aggregate commitments under the Credit Agreement from $45.0 million to $60.0 million.

On August 29, 2024, the Company entered into an amendment to the Credit Agreement pursuant to which the consolidated interest coverage ratio of Borrower will not be less than 2.00 to 1:00, the net charge-off percentage in relation to Borrower's portfolio of loan assets will not be less than 8% for such calendar month, and cumulative share repurchases will not exceed $7.0 million in value in any 12-month period.

As of September 30, 2025 there was no outstanding balance under the Credit agreement and $6.2 million outstanding as of December 31, 2024. During the three and nine months ended September 30, 2025, the Company recognized $0.3 million and $0.7 million, respectively, of interest expense in connection with the Credit Agreement. During the three and nine months ended September 30, 2024, the Company recognized $0.2 million and $0.8 million, respectively, of interest expense in connection with the Credit Agreement.

Senior Notes Due 2027

On October 3, 2023, the Company issued a $30.0 million aggregate principal amount of 9.00% Senior Notes due 2027 ("2027 Senior Notes" or "Notes”) in a registered underwritten public offering. On October 27, 2023, the underwriter exercised, in full, its over-allotment option by purchasing an additional approximately $3.0 million aggregate principal amount of the 2027 Senior Notes. The interest rates are fixed at 9.00% per annum and are payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing on December 31, 2023, and until maturity. The Notes will mature on January 31, 2027. The total net proceeds from the debt offering, after deducting initial purchase discounts and debt issuance costs, were approximately $30.6 million. The Company intends to use the net proceeds from the offering for general corporate purposes, including funding future acquisitions and investments, repaying indebtedness, making capital expenditures, and funding working capital.

The following table summarizes the outstanding balance of the Notes, net of debt issuance costs (in thousands):



	September 30, 2025		December 31, 2024
2027 Senior Notes	$	32,969	$	32,969
Debt issuance costs	(1,048)		(1,557)
Total unsecured senior notes, net	$	31,921	$	31,412

The Company’s future principal obligations for the Notes were as follows (in thousands):



	September 30, 2025
Remainder of 2025	$	—
2026	—
2027	32,969

Total unsecured senior notes principal	$	32,969

The Company may redeem the Notes for cash in whole or in part at any time (i) on or after September 30, 2025 (the “First Call Date”) and prior to September 30, 2026, at a price equal to the sum of 102% of their principal amount, and (ii) on or after September 30, 2026 at a price equal to the sum of 100% of their principal amount, plus (in each case noted above) accrued and unpaid interest to, but excluding, the date of redemption. At any time prior to the First Call Date, the Company may, at its option, redeem the Notes for cash, in whole at any time or in part from time to time at a redemption price equal to (i) 100% of the principal amount of Notes redeemed, plus (ii) a Make-Whole Amount (as defined in the Indenture), plus (iii) accrued and unpaid interest, if any, to, but excluding, the date of redemption. On and after any redemption date, interest will cease to accrue on the redeemed Notes. Additionally, upon the occurrence of a Triggering Event (as defined in the Indenture), holders of the Notes will have the right to

require the Company to make an offer to repurchase all or any portion of their Notes for cash at a purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.

The Notes are senior unsecured obligations of the Company and rank equal in right of payment with the Company’s existing and future senior unsecured indebtedness.

During the three and nine months ended September 30, 2025, the Company recognized $0.9 million and $2.7 million, respectively, of interest expense in connection with the Notes. During the three and nine months ended September 30, 2024, the Company recognized $0.9 million and $2.7 million, respectively, of interest expense in connection with the Notes.

The Company evaluated the 2027 Senior Notes for derivatives pursuant to Accounting Standard Codification ("ASC") 815, "Derivatives and Hedging," and identified an embedded derivative that required bifurcation as the feature is not clearly and closely related to the host instrument. The embedded derivative was a default provision, which could require additional interest payments. The Company reassesses the feature quarterly to determine if it requires separate accounting. There have been no changes to the Company’s assessment that the fair value of the embedded derivative is immaterial through September 30, 2025.

Note 7. Commitments and Contingencies

Lease Obligations

All the Company’s material leases are operating leases. Right-of-use ("ROU") assets related to operating leases are included on the unaudited condensed consolidated balance sheets in other non-current assets. Operating lease cost is recognized over the lease term on a straight-line basis and is recorded within general and administrative expenses on the unaudited condensed consolidated statements of income. In March of 2023, the Company entered into a new lease for office space in Dallas, Texas on Sherry Lane. The Company’s corporate office space in Dallas, Texas totals approximately 4,450 square feet.

The components of lease cost were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Operating lease cost	$	52	$	108	$	270	$	366
Variable lease cost	14		17		40		49
Total lease cost	$	66	$	125	$	310	$	415

Future minimum rent on the Company's operating leases was as follows as of September 30, 2025 (in thousands):



Remainder of 2025	$	45
2026	183
2027	188
2028	128


Total future lease payments	$	544

Contingent Consideration

During fiscal year 2019 the Company recorded contingent consideration related to the 2019 acquisition of MOD3 and sharing of certain milestone and royalties due to MOD3 pursuant to the License Agreement. Contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved, with changes in the estimated fair value recognized in earnings. During the three months ended June 30, 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. The write-off of this contingent consideration liability resulted in a gain of $4.9 million during the nine months ended September 30, 2024, and is included in the "Change in fair value of acquisition-related contingent consideration" caption of the Company's unaudited condensed consolidated statements of income.

Unfunded Commitments

Per the terms of the royalty purchase or credit agreements, unfunded commitments are contingent upon reaching an established revenue threshold or other performance metrics on or before a specified date or period of time, and in the case of loan transactions, are subject to being advanced as long as an event of default does not exist. As of September 30, 2025, the Company had $2.5 million of unfunded commitments.

Litigation

The Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course of its business. The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material impact on the Company’s results of operations, balance sheets and cash flows due to defense costs, and divert management resources. The Company cannot predict the timing or outcome of these claims and other proceedings. As of September 30, 2025, the Company is not involved in any arbitration and/or other legal proceeding that it expects to have a material effect on its business, financial condition, results of operations and cash flows.

Indemnification

As permitted by Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving in such capacity, or in other capacities at the Company’s request. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and enables the Company to recover a portion of any such amounts. As a result of the Company’s insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is insignificant. Accordingly, the Company had no liabilities recorded for these agreements as of September 30, 2025 and December 31, 2024.

Note 8. Fair Value Measurements

The Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price 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). GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels.

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in inactive markets.

Level 3: Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources.

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels for recurring fair value measurements during the three and nine months ended September 30, 2025 and 2024.

The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments, other than investment in affiliates.

Following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models and significant assumptions utilized.

Cash and cash equivalents

The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents approximate those assets’ fair values.

Finance Receivables

Finance receivables are measured at amortized cost, which approximates fair value. The fair value of finance receivables is estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the finance receivables. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. These receivables are classified as Level 3. Finance receivables are not measured at fair value on a recurring basis, but estimates of fair value are reflected below.

Marketable Investments

If active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities are classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets or broker quotes utilizing observable inputs, and accordingly these securities are classified as Level 2. If market prices are not available and there are no observable inputs, then fair value would be estimated by using valuation models including discounted cash flow methodologies, commonly used option-pricing models and broker quotes. Such securities are classified as Level 3, if the valuation models and broker quotes are based on inputs that are unobservable in the market. If fair value is based on broker quotes, the Company checks the validity of received prices based on comparison to prices of other similar assets and market data such as relevant benchmark indices. Available-for-sale securities are measured at fair value on a recurring basis, while securities with no readily available fair market value are not, but estimates of fair value are reflected below.

Derivative Instruments

For exchange-traded derivatives, fair value is based on quoted market prices, and accordingly, would be classified as Level 1. For non-exchange traded derivatives, fair value is based on option pricing models and are classified as Level 3.

The Company used a foreign currency forward contract to manage the impact of fluctuations in foreign currency denominated cash flows expected to be received from one of its royalty finance receivables denominated in a foreign currency. During April 2025, the Company sold the related royalty finance receivable as part of the Transaction (See Note 3). As a result, the Company terminated its foreign currency forward contract and received a cash payment of $1.6 million. The foreign currency forward contract was not designated as a hedging instrument, and changes in fair value were recognized in earnings. The foreign currency forward contract was recorded in other non-current assets in the condensed consolidated balance sheet as of December 31, 2024 and totaled $2.5 million. Prior to the termination of the foreign currency forward contract the Company recognized a loss of $0.9 million for the nine months ended September 30, 2025 due to changes in fair value related to its foreign currency forward contract. During the three and nine months ended September 30, 2024, the Company recognized a loss of $1.0 million and a gain of $0.6 million, respectively, due to changes in fair value related to its foreign currency forward contract.

The following table presents financial assets measured at fair value on a recurring basis as of September 30, 2025 (in thousands):


	Total Carrying Value in Consolidated Balance Sheets		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Warrant assets	$	7,599	$	—	$	—	$	7,599
Marketable investments	275		275		—		—

The following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 (in thousands):


	Total Carrying Value in Consolidated Balance Sheets		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Warrant assets	$	4,366	$	—	$	—	$	4,366
Marketable investments	580		559		—		21
Foreign currency forward contract	2,475		—		—		2,475

The changes in fair value of the warrant assets during were as follows (in thousands):


Nine Months Ended September 30, 2025			Nine Months Ended September 30, 2024
Fair value - December 31, 2024	$	4,366	Fair value - December 31, 2023	$	1,759
Issued	498		Issued	1,072

Exercised	—		Exercised	(985)
Change in fair value	2,563		Change in fair value	178
Gain on foreign currency transactions	172		Loss on foreign currency transactions	2
Fair value - September 30, 2025	$	7,599	Fair value - September 30, 2024	$	2,026

The Company holds warrants issued to the Company in conjunction with certain term loan investments. These warrants meet the definition of a derivative and are included in the unaudited condensed consolidated balance sheets. The fair values for warrants outstanding, which do not have a readily determinable value, are measured using the Black-Scholes option pricing model. The following ranges of assumptions were used in the models to determine fair value:


	September 30, 2025	December 31, 2024
Dividend rate range	—	—
Risk-free rate range	3.6% to 3.9%	4.2% to 4.5%
Expected life (years) range	1.1 to 6.4	1.9 to 6.9
Expected volatility range	64.0% to 167.0%	56.0% to 177.7%

The warrant assets are valued using a market approach and include significant unobservable inputs such as risk-free rate, expected life, and expected volatility. As of September 30, 2025 the risk-free rate range weighted average was 3.7%, and had a median of 3.7%. As of December 31, 2024, the risk-free rate range weighted average was 4.4%, and had a median of 4.4%. As of September 30, 2025 the expected life range weighted average was 5.2 years, and had a median of 4.5 years. As of December 31, 2024 the expected life range weighted average was 5.8 years, and had a median of 4.3 years. As of September 30, 2025 the expected volatility range weighted average was 70.1%, and had a median of 87.6%. As of December 31, 2024 the expected volatility range weighted average was 65.6%, and had a median of 104.3%.

As of September 30, 2025 and December 31, 2024, the Company had three royalties, Best, Ideal, and Flowonix that were deemed to be impaired based on reductions in carrying value. During three months ended September 30, 2025 the Company recognized an impairment reduction in carrying value of one royalty, Ideal. During the nine months ended September 30, 2025, the Company recognized impairment based on a reduction in carrying value of two royalties, Flowonix and Ideal. As of December 31, 2024, the Company had one loan, BIOLASE, that was deemed to be impaired based on reduction in carrying value in prior periods. The following table presents the royalties and the loan measured at amortized cost using the effective interest method, which approximates fair value, on a nonrecurring basis as of September 30, 2025 and December 31, 2024 (in thousands):


	Total Carrying Value in Consolidated Balance Sheets		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2025	$	11,502	$	—	$	—	$	11,502
December 31, 2024	$	14,830	$	—	$	—	$	14,830

There were no liabilities measured at fair value on a nonrecurring basis as of September 30, 2025 and December 31, 2024.

The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments measured at fair value on a recurring and non-recurring basis.

The following table presents the fair value of financial assets as of September 30, 2025 (in thousands):


	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets
Finance receivables, net	$	245,396	$	245,396	$	—	$	—	$	245,396

Marketable investments	275		275		275		—		—
Warrant assets	7,599		7,599		—		—		7,599

The following table presents the fair value of financial assets and liabilities as of December 31, 2024 (in thousands):


	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets
Finance receivables, net	$	277,760	$	277,760	$	—	$	—	$	277,760
Marketable investments	580		580		559		—		21
Warrant assets	4,366		4,366		—		—		4,366
Foreign currency forward contract	2,475		2,475		—		—		2,475

Note 9. Revenue Recognition

The Company's Pharmaceutical Development segment recognizes revenues received from contracts with its customers by revenue source, as we believe it best depicts the nature, amount, timing and uncertainty of our revenue and cash flow. The Company's Finance Receivables segment does not have any revenues received from contracts with customers.

The following table provides the contract revenue recognized by revenue source (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Pharmaceutical Development Segment
License Agreement	$	—	$	—	$	—	$	49
Pharmaceutical Development	—		628		2,153		1,662
Total contract revenue	$	—	$	628	$	2,153	$	1,711

The Company's contract liabilities represent advance consideration received from customers and are recognized as revenue when the related performance obligation is satisfied.

The Company’s contract liabilities are presented as deferred income and are included in accounts payable and accrued liabilities in the consolidated balance sheets (in thousands):


	September 30, 2025		December 31, 2024
Pharmaceutical Development Segment
Beginning balance	$	1,500	$	9
Income recognized (1)	(3,300)		(9)
Additions to deferred income	1,800		1,500
Ending balance	$	—	$	1,500
(1) Included as a component on the gain of sale of MOD3 assets

Note 10. Segment Information

Selected financial and descriptive information is required to be provided about reportable operating segments, considering a “management approach” concept as the basis for identifying reportable segments. The management approach is based on the way that management organizes the segments within the Company for making operating decisions, allocating resources, and assessing performance. Consequently, the segments are evident from the structure of the Company’s internal organization, focusing on financial information that the Company’s CEO uses to make decisions about the Company’s operating matters.

As described in Note 1, SWK Holdings Corporation and Summary of Significant Accounting Policies, the Company has determined it has two reportable segments: Finance Receivables and Pharmaceutical Development, and each are individually managed and provide separate services. Revenues by segment represent revenues earned on the services offered within each segment. The Company does not report assets by reportable segment, nor does the Company report results by geographic region, as these metrics are not used by the Company’s chief executive officer in assessing performance or allocating resources to the segments.

Segment performance is evaluated based on several factors, including income (loss) from continuing operations before income taxes. Management uses this measure of profit (loss) to evaluate segment performance because the Company believes this measure is indicative of performance trends and the overall earnings potential of each segment.

The following tables present financial information for the Company's reportable segments for the periods indicated (in thousands):


	Three Months Ended September 30, 2025
	Finance Receivables		Pharmaceutical Development and Other		Holding Company and Other		Consolidated
Revenue	$	10,822	$	—	$	—	$	10,822
Other revenue	60		—		—		60
Benefit from credit losses	(931)		—		—		(931)
Loss on impairment of intangible assets	—		209		—		209
Interest expense	240		13		926		1,179
Pharmaceutical manufacturing, research and development expense	—		147		—		147
Loss on disposal of inventory	—		314		—		314
Depreciation and amortization expense	—		—		2		2
General and administrative expense	110		258		2,918		3,286
Other income expense, net	2,419		1,601		—		4,020
Income tax expense	—		—		1,916		1,916
Net income (loss)	13,882		660		(5,762)		8,780


	Three Months Ended September 30, 2024
	Finance Receivables		Pharmaceutical Development and Other		Holding Company and Other		Consolidated
Revenue	$	9,498	$	628	$	—	$	10,126
Other revenue	289		3		—		292
Provision for credit losses	1,385		—		—		1,385

Interest expense	230		2		907		1,139
Pharmaceutical manufacturing, research and development expense	—		585		—		585

Depreciation and amortization expense	—		214		20		234
General and administrative expense	85		722		2,186		2,993
Other income (expense), net	292		—		—		292
Income tax expense	—		—		906		906
Net income (loss)	8,379		(892)		(4,019)		3,468


	Nine Months Ended September 30, 2025
	Finance Receivables		Pharmaceutical Development and Other		Holding Company and Other		Consolidated
Revenue	$	30,077	$	2,153	$	—	$	32,230
Other revenue	420		116		—		536
Benefit from credit losses	(1,635)		—		—		(1,635)
Loss on impairment of intangible assets	—		209		—		209
Interest expense	713		18		2,733		3,464
Pharmaceutical manufacturing, research and development	—		1,550		—		1,550
Loss on disposal of inventory	—		314		—		314
Depreciation and amortization expense	—		—		40		40
General and administrative expense	236		1,553		7,617		9,406
Other income (expense), net	138		1,519		—		1,657
Income tax expense	—		—		4,220		4,220
Net income (loss)	31,321		144		(14,610)		16,855


	Nine Months Ended September 30, 2024
	Finance Receivables		Pharmaceutical Development and Other		Holding Company and Other		Consolidated
Revenue	$	30,519	$	1,711	$	—	$	32,230
Other revenue	392		3		—		395
Provision for credit losses	10,777		—		—		10,777
Loss on impairment of intangible assets	—		5,771		—		5,771
Interest expense	820		7		2,687		3,514
Pharmaceutical manufacturing, research and development expense	—		1,635		—		1,635
Depreciation and amortization expense	—		1,106		63		1,169
Change in fair value of acquisition-related contingent consideration	—		(4,900)		—		(4,900)
General and administrative expense	254		2,179		6,164		8,597
Other income (expense), net	4,135		—		(411)		3,724
Income tax expense	—		—		2,170		2,170
Net income (loss)	23,195		(4,084)		(11,495)		7,616

Included in Holding Company and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs, including public company costs and corporate employees, which have been included for purposes of reconciling to the consolidated amounts.

The following table presents total assets for the Company's reportable segments for the periods indicated (in thousands):


	September 30, 2025		December 31, 2024
Total Assets
Finance receivables	$	266,580	$	299,248
Pharmaceutical development and other	—		7,786
Holdings Company and other	22,782		25,201
Total	$	289,362	$	332,235

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, and the MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”), as well as our unaudited condensed consolidated financial statements and the accompanying notes included in this report.

Overview

We have organized our operations into two segments: Finance Receivables and Pharmaceutical Development. These segments reflect the way the Company evaluates its business performance and manages its operations. Please refer to Item 1. Financial Statements, Note 10 of the notes to the unaudited condensed consolidated financial statements for further information regarding segment information.

Recent Developments

Agreement and Plan of Merger

The Merger Agreement provides that, among other things and on the terms and subject to the conditions of the Merger Agreement, (i) Acquisition Sub will merge with and into the Company, with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Intermediary Sub (the “Surviving Corporation”), or, in the alternative, the Company will merge with and into Acquisition Sub, with Acquisition Sub continuing as the surviving corporation and as a wholly owned subsidiary of Intermediary Sub (in either case, the “First Merger”), (ii) immediately after the First Merger, the Surviving Corporation will merge with and into Intermediary Sub (the “Second Merger”), with Intermediary Sub surviving the Second Merger as a wholly owned subsidiary of Parent, and (iii) immediately after the Second Merger, Intermediary Sub will merge with and into Parent (the “Third Merger” and, together with the Second Merger and the First Merger, the “Mergers”), with Parent continuing as the surviving corporation in the Third Merger.

The foregoing summary description of the Merger Agreement, the Mergers and the other transactions contemplated thereby is subject to and qualified in its entirety by reference to the Merger Agreement, a copy of which is attached hereto as Exhibit 2.01, and the terms of which are incorporated herein by reference.

Key Stockholder Agreement

Concurrently with the execution and delivery of the Merger Agreement, and as a condition and inducement to Parent’s willingness to enter into the Merger Agreement, Double Black Diamond Offshore Ltd. (the “Key Stockholder”), a stockholder of the Company, has entered into a key stockholder agreement with Parent (the “Key Stockholder Agreement”) pursuant to which the Key Stockholder has, subject to the terms and conditions thereof, agreed, among other things, to vote its shares of Company Common Stock in favor of the adoption of the Merger Agreement and the approval of the transactions contemplated thereunder, including the First Merger. As of October 9, 2025, the Key Stockholder held approximately 69.9% of the voting power of the Company Common Stock.

The foregoing summary description of the Key Stockholder Agreement is subject to and qualified in its entirety by reference to the Key Stockholder Agreement, a copy of which is attached hereto as Exhibit 2.02 and the terms of which are incorporated herein by reference.

Finance Receivables Portfolio Overview

The table below provides an overview of our outstanding finance receivables transactions as of and for the three and nine months ended September 30, 2025 (in thousands, except rate, share and per share data):


						Revenue Recognized
Royalty Purchases	Licensed Technology	Funded Amount		GAAP Balance		Q3 2025		Year-to-Date
Besivance® (1)	Ophthalmic antibiotic	$	6,000	$	—	$	—	$	2
Forfivo XL® (6)	Depressive disorder treatment	6,000		—		—		506
Coflex®/Kybella® (6)	Spinal stenosis/submental fullness	4,350		—		—		48
Cambia® (6)	NSAID migraine treatment	8,500		—		—		98
Duo Royalty (6)	Japanese Women's health/cystic fibrosis	15,353		—		—		591
Immune Globulin (6)	Immune Globulin Therapeutics	14,100		—		—		443
Relief (6)	Rare Disease Portfolio	7,701		—		—		336
Best ABT, Inc.(2), (3)	Oncology diagnosis	5,784		2,347		—		—
Flowonix Medical, Inc.(2), (3), (4)	Drug delivery device	12,455		6,633		—		—
Ideal Implant, Inc.(2), (3)	Aesthetics	4,025		2,522		—		—
Iluvien® (7)	Diabetic macular edema	16,501		—		—		519


								Revenue Recognized
Term Loans	Type	Maturity Date	Principal		GAAP Balance		Rate	Q3 2025		Year-to-Date
4Web, Inc.	First lien	12/31/27	$	19,486	$	23,037	12.8%	$	1,226	$	3,083
AOTI, Inc.	First lien	02/15/29	19,478		19,623		13.0%	658		1,411

Elutia, Inc.	First lien	08/10/27	22,074		27,372		11.0%	2,335		4,161

Biotricity, Inc.	First lien	02/15/27	13,846		14,413		11.5%	660		2,004
CDMO Manufacturer	First lien	09/13/27	5,000		5,491		13.3%	205		599

eTon Pharmaceuticals, Inc.	First lien	12/17/27	30,000		29,644		11.8%	1,156		3,391
Journey Medical Corporation	First lien	12/27/27	25,000		25,213		12.8%	925		2,742

MedMinder Systems, Inc.	First lien	08/18/28	22,500		22,987		12.3%	814		2,406
MolecuLight, Inc.(7)	First lien	12/29/27	—		—		12.8%	—		27
Nicoya Lifesciences, Inc.	First lien	11/30/26	8,500		8,846		12.8%	390		954
NeoLight, LLC	First lien	05/15/27	5,553		5,923		13.5%	224		681
Shield Therapeutics, Plc	First lien	09/28/28	20,000		20,033		14.3%	865		2,533
SKNV	First lien	11/15/28	15,997		16,409		14.0%	505		1,497
Triple Ring	First lien	12/06/28	8,000		8,049		12.0%	287		847
ImpediMed	First lien	02/05/30	15,000		14,594		13.8%	572		1,198


					Gain (Loss) Recognized
Marketable Investments	Number of Shares	Funded Amount	GAAP Balance		Q3 2025		Year-to-Date

AOTI Common Stock (5)	402,634	N/A	230		(191)		(276)
Elutia, Inc (8)	50,000	N/A	$	45	$	(55)	$	(38)



Privately Held Shares						Number of Shares
Epica International, Inc						25,000
Sincerus Pharmaceuticals, Inc						26,575
MolecuLight, Inc						250,000


						Change in Fair Value
Warrants to Purchase Stock	Number of Shares	Exercise Price per Share		GAAP Balance		Q3 2025		Year-to-Date
4Web, Inc.	TBD	$	—	$	—	$	—	$	—
ImpediMed Tranche 1	12,491,870	$	0.05	180		29		(131)
ImpediMed Tranche 2	6,245,935	$	0.05	90		(88)		(88)
Aziyo Biologics, Inc. Tranche 1	157,895	$	6.65	38		(91)		(315)
Aziyo Biologics, Inc. Tranche 2	30,075	$	6.65	7		(17)		(60)
Biotricity, Inc. Tranche 1	9,589	$	6.26	—		—		—
Biotricity, Inc. Tranche 2	600,000	$	0.50	309		92		145
Biotricity, Inc. Tranche 3	54,300	$	2.21	13		(36)		(36)
Biotricity, Inc Tranche 4	27,150	$	2.21	13		(36)		(36)
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	829		367		405
Eton Pharmaceuticals, Inc. Tranche 2	18,141	$	6.62	288		127		140
Eton Pharmaceuticals, Inc. Tranche 3	289,736	$	5.32	5,350		2,061		2,342

Nicoya Lifesciences, Inc	276,630	C$	1.81	—		—		—
Nicoya Lifesciences, Inc	117,305	C$	6.26	—		—		—
Shield Warrant	8,910,540	$	0.14	482		232		197
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	—		—		—


			Revenue Recognized
	Assets		Q3 2025		Year-to-Date
Total finance receivables, gross	$	253,136	$	10,822	$	30,077

Total marketable investments	275		—		—
Total fair value of warrant assets	7,599		—		—
Total	$	261,010	$	10,822	$	30,077


(1)			US royalty was paid off but 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 is expected to receive royalties on sales of two products.
(5)			AOTI warrants exercised and converted to shares.
(6)			Royalties sold as of September 30, 2025
(7)			Investment was paid off during the nine months ended September 30, 2025
(8)			Elutia common stock received as part of amendment to term loan.

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

Our critical accounting policies and estimates are described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report. We believe there have been no new critical accounting policies or material changes to our existing critical accounting policies and estimates during the nine months ended September 30, 2025, compared to those discussed in our Annual Report.

Recent Accounting Pronouncements

Refer to Part I. Financial Information, Item 1. Financial Statements, Note 1 of the notes to the unaudited condensed consolidated financial statements for a listing of recent accounting pronouncements and their potential impact to our consolidated financial statements.

Comparison of the three months ended September 30, 2025 and 2024 (in millions)


	Three Months Ended September 30,
	2025		2024		Change $
Revenues	$	10.9	$	10.4	$	0.5
Provision (benefit) for credit losses	(0.9)		1.4		(2.3)
Loss on impairment of intangible assets	0.2		—		0.2
Interest expense	1.2		1.1		0.1
Pharmaceutical manufacturing, research and development expense	0.1		0.6		(0.5)
Loss on disposal of inventory	0.3		—		0.3
Depreciation and amortization expense	—		0.2		(0.2)
General and administrative expense	3.3		3.0		0.3
Other income (expense), net	4.0		0.3		3.7
Income tax expense	1.9		0.9		1.0
Net income	8.8		3.5		5.3

Revenues

Revenues increased to $10.9 million for the three months ended September 30, 2025 from $10.4 million for the three months ended September 30, 2024. The $0.5 million increase in revenue for the three months ended September 30, 2025 was primarily due to a $1.1 million increase in Finance Receivables segment revenue. The finance receivables segment revenue increased primarily due to the acceleration of exit fees earned on early payoff of the loan with Elutia, Inc.

Provision (benefit) for 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 net benefit for credit losses of $0.9 million and a provision for credit losses of $1.4 million during the three months ended September 30, 2025 and 2024, respectively. The change is primarily due to the release of CECL reserves related to the early payoff of the loan with Elutia, Inc.

Interest Expense

Interest expense consists mostly 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 three months ended September 30, 2025 as compared to the same period in the previous period.

Pharmaceutical Manufacturing, Research and Development Expense

Pharmaceutical manufacturing, research and development expense decreased for the three months ended September 30, 2025 as compared to the same period in the previous year as a result of the MOD3 asset sale.

Depreciation and Amortization Expense

The $0.2 million decrease in depreciation and amortization expense for the three months ended September 30, 2025 primarily due to the suspension of depreciation and amortization on assets held for sale and the subsequent sale of those assets.

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 for the three months ended September 30, 2025 as compared to 2024, primarily due to increased legal fees partially offset by a reduction in compensation costs as a result of the MOD3 asset sale.

Other Income (Expense), Net

Other income (expense), net increased to an income of $4.0 million for the three months ended September 30, 2025 from income of $0.3 million for the three months ended September 30, 2024. The $3.7 million increase primarily relates to the gain on fair value of adjustments of warrants and gain on sale of the MOD3 assets.

Income Tax Expense

Income tax expense increased for the three months ended September 30, 2025 as compared to the same period in the previous year as a result of the change in the provision for credit losses.

Comparison of the nine months ended September 30, 2025 and 2024 (in millions)


	Nine Months Ended September 30,
	2025		2024		Change $
Revenues	$	32.8	$	32.6	$	0.2
Provision (benefit) for credit losses	(1.6)		10.8		(12.4)
Loss on impairment of intangible assets	0.2		5.8		(5.6)
Interest expense	3.5		3.5		—
Pharmaceutical manufacturing, research and development expense	1.6		1.6		—
Loss on disposal of inventory	0.3		—		0.3
Change in fair value of acquisition-related contingent consideration	—		(4.9)		4.9
Depreciation and amortization expense	—		1.2		(1.2)
General and administrative expense	9.4		8.6		0.8
Other income (expense), net	1.7		3.7		(2.0)
Income tax expense	4.2		2.2		2.0
Net income	16.9		7.6		9.3

Revenues

Revenues increased to $32.8 million for the nine months ended September 30, 2025 from $32.6 million for the nine months ended September 30, 2024. The $0.2 million increase in revenue for the nine months ended September 30, 2025 consisted of a $0.4 million decrease in Finance Receivables segment revenue offset by a $0.6 million increase in Pharmaceutical Development segment revenue. The $0.4 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. The increase in the Pharmaceutical Development segment was primarily due to the Aptar collaboration agreement.

Provision (Benefit) for 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 net benefit for credit losses of $1.6 million during the nine months ended September 30, 2025 and a provision of $10.8 million during the nine months ended September 30, 2024. The decrease was primarily due to impairments included within the provision for credit losses during the nine months ended September 30, 2024. See Note 3 to the unaudited condensed consolidated financial statements for further information on the allowance for credit losses.

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 nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Pharmaceutical Manufacturing, Research and Development Expense

Pharmaceutical manufacturing, research and development expense remained consistent for the nine months ended September 30, 2025 as compared to the same period in the prior year.

Depreciation and Amortization Expense

The $1.2 million decrease in depreciation and amortization expense for the nine months ended September 30, 2025 primarily consists of a decrease in amortization expense related to no longer amortizing intangible assets related to the license with Cara Therapeutics, Inc, as the intangible assets were fully impaired during the three months ended June 30, 2024. 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 $9.4 million for the nine months ended September 30, 2025 from $8.6 million for the nine months ended September 30, 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 income of $1.7 million for the nine months ended September 30, 2025 from income of $3.7 million for the nine months ended September 30, 2024. The $2.0 million decrease is primarily due to a loss on the revaluation of finance receivables in the current period compared to a gain on the revaluation of finance receivables during the same period in the prior year.

Income Tax Expense

During the nine months ended September 30, 2025 and 2024 we recognized $4.2 million and $2.2 million of income tax expense, respectively. Income tax expense increased period over period due to the release of valuation allowance on deferred tax assets of $1.0 million during the nine months ended September 30, 2024 and a change in the Company's provision for credit losses compared to the same period in the prior year.

Liquidity and Capital Resources

As of September 30, 2025, we had $10.2 million in cash and cash equivalents, compared to $5.9 million as of December 31, 2024. The primary driver of the $4.3 million increase in our cash balance was primarily related to interest, fees, principal and royalty payments received on finance receivables, and proceeds from the sale 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 October 10, 2023, the Company entered into a First Amendment to Credit Agreement pursuant to which Woodforest National Bank was added as a lender under the Credit Agreement for an aggregate commitment of $15.0 million, thereby increasing the aggregate commitments under the Credit Agreement from $45.0 million to $60.0 million. As of September 30, 2025, there was no outstanding amount under the new Credit Agreement. The $60.0 million Credit Agreement contains a $5.0 million liquidity covenant, bringing the total amount available for borrowing to $55.0 million.

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, as well as the success of our Pharmaceutical Development segment. We generate 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.To a lesser extent, realizing capital appreciation from equity-related investments in the life science sector.

As of September 30, 2025, our finance receivables portfolio contains $245.4 million of net finance receivables and $0.3 million of marketable investments. We expect these assets to generate positive cash flows during the remainder of 2025. 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.

Since the timing of any investment is difficult to predict, our Finance Receivables segment may not be able to generate positive cash flow above what our existing assets are expected to produce in 2025. We do not assume any near-term repayments from borrowers, and as a result, no assurances can be given that actual results would not differ materially from the statement above.

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 September 30, 2025, we had $2.5 million in unfunded commitments. Please refer to Item 1., Financial Statements, Note 7 of the notes to the unaudited condensed consolidated financial statements for further information regarding the Company’s commitments and contingencies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

During the nine months ended September 30, 2025, our cash and cash equivalents were deposited in accounts at well capitalized financial institutions. The fair value of our cash and cash equivalents at September 30, 2025 approximated its carrying value.

Investment and Interest Rate Risk

We are subject to financial market risks, including changes in interest rates. Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flow.

As we seek to provide capital to a broad range of life science companies, institutions and investors with the majority of our finance receivables portfolio paying interest based on floating interest rates with a reference rate floor, our net investment income is dependent, in part, upon the difference between the rate at which we earn on our cash and cash equivalents and the rate at which we lend those funds to third parties. As a result, we are subject to risks relating to changes in market interest rates. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations by providing capital at variable interest rates. We do not currently engage in any interest rate hedging activities. We constantly monitor our portfolio and position our portfolio to respond appropriately to a reduction in credit rating of any of our investments.

We entered into a revolving credit facility. As we borrow funds to make additional investments, our income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we are subject to risks relating to changes in market interest rates. In periods of rising interest rates when we have debt outstanding, our cost of funds would increase, which could reduce our income, especially to the extent we continue to hold fixed rate investments. We generally seek to mitigate this risk by pricing our debt investments with floating interest rates to maintain the spread of our portfolio over the cost of leverage. If deemed prudent, we may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations, which we have not done. Adverse developments resulting from changes in interest rates or hedging transactions could have a materially adverse effect on our business, financial condition and results of operations. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our investment income, net of borrowing expenses.

Inflation

Certain of our partner companies may be impacted by inflation. If such partner companies are unable to pass any increases in their costs along to their customers, it could adversely affect their results and impact their ability to pay interest and principal on our loans. In addition, any projected future decreases in our partner companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future unrealized losses and therefore reduce carrying value of our net assets.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this report, our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There have been no changes during the three months ended September 30, 2025 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in, or have been involved in, arbitrations or various other legal proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these claims and other proceedings. The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material negative impact on our results of operations, balance sheets and cash flows due to defense costs, and divert management resources. Currently, we are not involved in any arbitration and/or other legal proceeding that we expect to have a material effect on our business, financial condition, results of operations and cash flows.

ITEM 1A. RISK FACTORS

Information regarding the Company’s risk factors appears in “Part I. – Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 20, 2025. There are no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On May 31, 2022, the Board authorized a share repurchase program under which the Company was authorized to repurchase up to $10.0 million of the Company’s outstanding shares of common stock. The previous repurchase periods under this program were July 1, 2022 through May 15, 2023, May 16, 2023 through May 15, 2024, and May 16, 2024 through May 16, 2025. (the "Prior Repurchase Programs").

On May 19, 2025, the Company announced that the Board had authorized the Company to repurchase up to $10.0 million of the Company’s outstanding shares of common stock from time-to-time until May 19, 2026, through a trading plan established in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act (the “Current Repurchase Program”). The actual timing, number and value of shares repurchased under the Current Repurchase Program will depend on several factors, including the constraints specified in the Rule 10b5-1 trading plan, price, and general market conditions. There is no guarantee as to the exact number of shares that will be repurchased under the Current Repurchase Program. The Current Repurchase Program was cancelled on August 11, 2025.

The table below summarizes information about our purchases of common stock during the three months ended September 30, 2025 (in thousands, except share and per share data):


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan
July 1, 2025 - July 31, 2025	65,145	$	15.20	65,145	$	8,325
August 1, 2025 - August 31, 2025	22,782	14.88		22,782	$	—
September 1, 2025 - September 30, 2025	—	—		—	$	—
	87,927	$	15.12	87,927

As of September 30, 2025, the Company has repurchased an aggregate of 992,629 shares under the Prior Repurchase Programs and Current Repurchase Program at a total cost of $16.5 million, or $16.67 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

Number

Exhibit Description

Filing

Filed

Form

Exhibit

Date

Herewith

2.01

Agreement and Plan of Merger, dated as of October 9, 2025, by and among SWK Holdings Corporation, Runway Growth Finance Corp., RWAY Portfolio Holding Corp., RWAY Portfolio Corp. and Runway Growth Capital LLC

8-K

2.1

10/10/25

2.02

Key Stockholder Agreement, dated as of October 9, 2025, by and among Runway Growth Finance Corp., Double Black Diamond Offshore Ltd. and Black Diamond Offshore Ltd.

8-K

99.1

10/10/25

3.01

Third Amended and Restated Certificate of Incorporation, dated as of August 12, 2022.

8-K

3.1

8/15/22

3.02

Amended and Restated Bylaws, dated as of August 12, 2022.

8-K

3.02

8/15/22

31.01

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.02

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS+

XBRL Instance

101.SCH+

XBRL Taxonomy Extension Schema

101.CAL+

XBRL Taxonomy Extension Calculation

101.DEF+

XBRL Taxonomy Extension Definition

101.LAB+

XBRL Taxonomy Extension Labels

101.PRE+

XBRL Taxonomy Extension Presentation

* These certifications accompany this Quarterly Report on Form 10-Q. They are not deemed “filed” with the Securities and Exchange Commission and are not to be incorporated by reference in any filing of SWK Holdings Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

+ XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

# Exhibits and/or schedules to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplemental copies of any omitted exhibits or schedules to the SEC upon request; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any exhibits or schedules so furnished.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 6, 2025.


			SWK Holdings Corporation

			By:			/s/ Joe D. Staggs
						Joe D. Staggs
						Chief Executive Officer
						(Principal Executive Officer)

			By:			/s/ Adam Rice
						Adam Rice
						Chief Financial Officer
						(Principal Financial and Accounting Officer)