Abacus Life Reports First Quarter 2024 Results

Rhea-AI Summary

Abacus Life, Inc. reported a more than doubled total revenue of $21.5 million in the first quarter of 2024, driven by a 59% year-over-year growth in the Direct-to-Consumer division. The company also launched ABL Tech, raised $25 million from the issuance of senior notes, and strengthened its management team. Adjusted EBITDA grew by 38.1% to $11.6 million, with an EBITDA margin of 53.9%. Despite a GAAP net loss of $1.3 million, adjusted net income was $6.7 million. The company had cash equivalents of $65.4 million and repurchased shares worth $11 million.

Positive

• Total revenue more than doubled to $21.5 million in Q1 2024.

• 59% year-over-year growth in the Direct-to-Consumer division.

• Launched ABL Tech and raised $25 million from senior notes issuance.

• Strengthened management team by appointing new executives.

• Adjusted EBITDA grew by 38.1% to $11.6 million.

• EBITDA margin was 53.9% in Q1 2024.

• Adjusted net income was $6.7 million.

• Company had cash equivalents of $65.4 million.

• Repurchased 966 thousand shares of common stock worth $11 million.

Negative

• GAAP net loss of $1.3 million in Q1 2024.

• Non-cash expense related to employee stock compensation of $5.8 million.

• Public company expenses incurred in Q1 2024 not recorded in the prior-year period.

Insights

Financial Analyst

The first quarter results of Abacus Life are noteworthy as the company has reported a significant year-over-year increase in total revenue, which is now pegged at $21.5 million. This performance primarily stems from a 59% growth in their Direct-to-Consumer Division. Such a leap is impressive and indicates a strong market presence and an effective business strategy in play.

However, the excitement is tempered by a GAAP net loss of $1.3 million, attributed to high interest expenses and non-cash expenses related to employee stock compensation. The distinction between GAAP net loss and adjusted net income, which stands at $6.7 million, is important for investors to understand, as it reflects the company's profitability after making several accounting adjustments. The substantial discrepancy here suggests a significant impact of non-cash and non-recurring charges on the reported net loss.

The adjusted EBITDA, which grew 38.1% to $11.6 million, provides a clearer picture of the company's earnings before interest, taxes, depreciation and amortization, implying a healthy operational performance. The adjusted EBITDA margin decline from 81.4% to 53.9%, however, indicates that the costs have increased at a faster rate than the revenue, which could raise concerns about the company's cost management effectiveness in the long run.

Market Analyst

Abacus Life's aggressive growth strategy is further evidenced by the strategic launch of their technology subdivision ABL Tech and the successful raise of $25 million through the issuance of 9.875% Fixed Rate Senior Notes. The company's decision to continue repurchasing shares, with $4 million remaining in their repurchase program, reflects confidence in their own stock and an attempt to deliver value to shareholders.

A important perspective here is the company's liquidity position with cash and cash equivalents of $65.4 million. This, alongside the balance sheet policy assets of $126.9 million and a maintained long-term debt of $131.4 million, suggests a solid balance between assets and liabilities.

The reduction in total revenue from the portfolio servicing segment could be indicative of strategic shifts within the company. It's essential for investors to monitor such shifts as they can have long-term implications on revenue streams and the company's market positioning.

Investment Risk Analyst

From an investment risk perspective, the annualized return on invested capital (ROIC) at 15% and return on equity (ROE) at 16% are promising indicators of the company's ability to generate profits from its investments and equity base, respectively. However, the reported GAAP net loss presents a contrasting risk parameter that needs to be reconciled against the non-GAAP measures for a comprehensive understanding of the company's financial health.

Investors should also consider the potential risks associated with the company's debt levels in relation to its assets and ability to generate sufficient cash flow for debt servicing. The increase in interest expense, which contributed to the GAAP net loss, is a critical factor that could affect the company's future profitability and cash flow, hence impacting its ability to service debt and fund further expansion.

- First Quarter 2024 Total Revenue More Than Doubled Year-over-Year to $21.5 Million -

- Driven by 59% Year-over-Year Growth in Direct-to-Consumer Division -

ORLANDO, Fla., May 13, 2024 (GLOBE NEWSWIRE) -- Abacus Life, Inc. (“Abacus” or the “Company”) (NASDAQ: ABL), a pioneering alternative asset manager specializing in longevity and actuarial technology, today reported results for the first quarter ended March 31, 2024.

“We are pleased with our continued momentum, delivering yet another strong quarterly performance due to our relentless execution, and further validating the resiliency and profitability of our business model,” said Jay Jackson, Chief Executive Officer of Abacus. “In addition to our strong growth, we launched our technology subdivision ABL Tech, raised an additional $25 million from the issuance of our 9.875% Fixed Rate Senior Notes, and continued to repurchase shares. We also strengthened our senior management team with the hiring of Elena Plesco as our new Chief Capital Officer, and appointing Fei Xue to lead our efforts at ABL Wealth. We remain focused and committed to delivering on our key strategic priorities by leveraging our considerable technology and data advantages to further drive shareholder value.”

First Quarter 2024 Highlights

• Total revenue for the first quarter of 2024 more than doubled to $21.5 million, compared to $10.3 million in the prior-year period. The increase was primarily driven by higher active management revenue, increased capital deployed and more policies sold directly to third parties.
  
  
  • Total revenue from portfolio servicing segment for the first quarter of 2024 was $0.2 million, compared to $0.3 million in the prior-year period.
• Originations capital deployment for the first quarter of 2024 were $33.3 million, compared to $34.4 million in the prior-year period; number of policy originations for the first quarter of 2024 grew 6% to 119, compared to 112 in the prior-year period.
• GAAP net loss attributable to shareholders for the first quarter of 2024 was $1.3 million, compared to GAAP net income attributable to shareholders of $8.1 million in the prior-year period, primarily driven by higher interest expenses, a non-cash expense related to employee stock compensation of $5.8 million and public company expenses incurred in the first quarter of 2024 that were not recorded in the prior-year period.
• Adjusted net income for the first quarter of 2024 was $6.7 million, compared to $7.6 million in the prior-year period.
• Adjusted EBITDA for the first quarter of 2024 grew 38.1% to $11.6 million, compared to $8.4 million in the prior-year period. Adjusted EBITDA margin (a non-GAAP measure) for the first quarter of 2024 was 53.9%, compared to 81.4% in the prior-year period.
• Annualized return on invested capital (ROIC) (a non-GAAP measure defined below) for the first quarter of 2024 was 15%.
• Annualized Return on equity (ROE) (a non-GAAP measure defined below) for the first quarter of 2024 was 16%.

Liquidity and Capital

As of March 31, 2024, the Company had cash and cash equivalents of $65.4 million, balance sheet policy assets of $126.9 million and outstanding long-term debt of $131.4 million.

From the commencement of the Company’s $15 million stock repurchase program previously announced on December 12, 2023 (the “Repurchase Program”) through May 6, 2024, Abacus has repurchased 966 thousand shares of its common stock at an average price of $11.41 on the open market at a total cost of approximately $11 million. As of May 6, 2024, the Company has $4 million of availability under the Repurchase Program, which expires on June 10, 2025, unless sooner suspended or discontinued.

Webcast and Conference Call

A webcast and conference call to discuss the Company’s results will be held today beginning at 9:00 a.m. (Eastern Time). A live webcast of the conference call will be available on Abacus’ investor relations website at ir.abacuslife.com. The dial-in number for the conference call is (877) 407-9716 (toll-free) or (201) 493-6779 (international). Please dial the number 10 minutes prior to the scheduled start time.

A webcast replay of the call will be available at ir.abacuslife.com for one year following the call.

Non-GAAP Financial Information

Adjusted Net Income, a non-GAAP measure, is defined as net income (loss) attributable to Abacus adjusted for non-controlling interest income, amortization, change in fair value of warrants and non-cash stock-based compensation and the related tax effect of those adjustments. Management believes that Adjusted Net Income is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance. A reconciliation of Adjusted Net Income to Net income attributable to Abacus, the most directly comparable GAAP measure, appears below.

Adjusted EBITDA, a non-GAAP measure, is defined as net income (loss) attributable to Abacus adjusted for depreciation expense, amortization, interest expense, income tax and other non-cash and certain non-recurring items that in our judgement significantly impact the period-over-period assessment of performance and operating results that do not directly relate to business performance within Abacus’ control. A reconciliation of Adjusted EBITDA to Net income attributable to Abacus Life, the most directly comparable GAAP measure, appears below.

Adjusted EBITDA margin, a non-GAAP measure, is defined as Adjusted EBITDA divided by Total revenues. A reconciliation of Adjusted EBITDA margin to Net income margin, the most directly comparable GAAP measure, appears below.

Annualized return on invested capital (ROIC), a non-GAAP measure, is defined as Adjusted net income for the quarter divided by the result of Total Assets less Intangible assets, net, Goodwill and Current Liabilities multiplied by four. ROIC is not a measure of financial performance under GAAP. We believe ROIC should be considered in addition to, not as a substitute for, operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities or other income statement or cash flow statement line items reported in accordance with GAAP.

Annualized return on equity (ROE), a non-GAAP measure, is defined as Adjusted net income divided by total shareholder equity multiplied by four. ROE is not a measure of financial performance under GAAP. We believe ROE should be considered in addition to, not as a substitute for, operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities or other income statement or cash flow statement line items reported in accordance with GAAP. The below table presents our calculation of ROE.

Forward-Looking Statements

All statements in this press release (and oral statements made regarding the subjects of this press release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of Abacus. Forward-looking information includes but is not limited to statements regarding: Abacus’s financial and operational outlook; Abacus’s operational and financial strategies, including planned growth initiatives and the benefits thereof, Abacus’s ability to successfully effect those strategies, and the expected results therefrom. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “expect,” ‎‎”intend,” “anticipate,” “goals,” “prospects,” “will,” “would,” “will continue,” “will likely result,” and similar expressions (including the negative versions of such words or expressions).

While Abacus believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. The factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to: the ‎fact that Abacus’s loss reserves are bases on estimates and may be inadequate to cover ‎its actual losses; the failure to properly price Abacus’s insurance policies; the ‎geographic concentration of Abacus’s business; the cyclical nature of Abacus’s industry; the ‎impact of regulation on Abacus’s business; the effects of competition on Abacus’s business; the failure of ‎Abacus’s relationships with independent agencies; the failure to meet Abacus’s investment ‎objectives; the inability to raise capital on favorable terms or at all; the ‎effects of acts of terrorism; and the effectiveness of Abacus’s control environment, including the identification of control deficiencies.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties set forth in documents filed by Abacus with ‎the U.S. Securities and Exchange Commission from time to time, including the Annual ‎Report on Form 10-K and Quarterly Reports on Form 10-Q and subsequent ‎periodic reports. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Abacus cautions you not to place undue reliance on the ‎forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Abacus assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Abacus does not give any assurance that it will achieve its expectations.

About Abacus

Abacus is a leading vertically integrated alternative asset manager and market maker, specializing in longevity and actuarial technology. The company is democratizing the life insurance space through three groundbreaking new channels: ABL Tech, ABL Wealth, and ABL Longevity Growth & Income Funds. Since 2004, Abacus has purchased life insurance policies from consumers seeking liquidity and has actively managed those policies over time (via trading, holding, and/or servicing). With over $5BN in face value of policies purchased, we have helped thousands of clients maximize the value of life insurance. Abacus Life is the only public life settlement company, trading on the Nasdaq Exchange under the ticker symbol ABL.

Over the past 20 years, the company has built an institutionalized origination and portfolio management process that is supported by a 100+ person team, long-term relationships with 78 institutional partners and 30,000 financial advisors, and the ability to operate in 49 states. The Company complies with HIPAA and privacy laws to maintain and protect confidentiality of financial, health, and medical information. Abacus is also proud to be a BBB Accredited Business with an A+ rating.

www.Abacuslife.com

Contact:
Abacus Life Investor Relations
investors@abacuslife.com

Abacus Life Public Relations
press@abacuslife.com

ABACUS LIFE, INC. Condensed Consolidated Balance Sheets

	March 31,				December 31,
		2024				2023
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$65,386,512				$25,588,668
Equity securities, at fair value		3,403,897				2,252,891
Accounts receivable		2,520,869				2,149,111
Accounts receivable, related party		215,033				79,509
Due from affiliates		760,364				1,007,528
Prepaid expenses and other current assets		2,037,753				699,127
Total current assets		74,324,428				31,776,834
Property and equipment, net		547,561				400,720
Intangible assets, net		28,048,028				29,623,130
Goodwill		140,287,000				140,287,000
Operating right-of-use assets		2,182,681				1,893,659
Life settlement policies, at cost		1,434,444				1,697,178
Life settlement policies, at fair value		125,488,525				122,296,559
Available-for-sale securities, at fair value		1,145,630				1,105,935
Other investments, at cost		1,650,000				1,650,000
Other assets		1,501,036				998,945
Equity securities, at fair value		110,067				96,107
TOTAL ASSETS	$376,719,400				$331,826,067
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$15,648,628				$13,029,632
Accrued expenses		707,159				4,354,225
Operating lease liabilities		232,138				118,058
Due to affiliates		5,236				5,236
Due to former members		1,159,712				1,159,712
Contract liabilities, deposits on pending settlements		667,500				507,000
Other current liabilities		3,797,808				3,400,734
Income taxes payable		1,617,171				751,734
Total current liabilities		23,835,352				23,326,331
Long-term debt, related party		38,794,519				37,653,869
Long-term debt		131,365,988				89,137,013
Operating lease liabilities		2,028,959				1,796,727
Deferred tax liability		9,657,810				9,199,091
Warrant liability		5,696,000				6,642,960
TOTAL LIABILITIES		211,378,628				167,755,991
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Class A common stock, $0.0001 par value; 200,000,000 authorized shares; 63,776,058 and 63,388,823 shares issued at March 31, 2024 and December 31, 2023, respectively		6,378				6,339
Treasury stock - at cost; 778,766 and 146,650 shares repurchased at March 31, 2024 and December 31, 2023, respectively		(8,807,454	)			(1,283,062	)
Additional paid-in capital		209,889,362				199,826,278
Accumulated deficit		(36,074,880	)			(34,726,135	)
Accumulated other comprehensive income		120,323				108,373
Non-controlling interest		207,043				138,283
Total stockholders' equity		165,340,772				164,070,076
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$376,719,400				$331,826,067

ABACUS LIFE, INC. Condensed Consolidated Statement of Operations

	Three Months Ended
	March 31,
		2024				2023
REVENUES:
Portfolio servicing revenue	$217,935				$302,871
Active management revenue		19,796,999				9,970,518
Origination revenue		1,472,250				—
Total revenues		21,487,184				10,273,389
Total cost of revenue		2,720,897				489,550
Gross Profit		18,766,287				9,783,839
OPERATING EXPENSES:
Sales and marketing		1,929,944				729,004
General and administrative (including stock-based compensation)		11,353,499				696,892
Loss on change in fair value of debt		2,712,627				953,433
Unrealized (gain) on investments		(1,164,966	)			(125,220	)
Depreciation and amortization expense		1,682,054				1,043
Total operating expenses		16,513,158				2,255,152
Operating Income	$2,253,129				$7,528,687
OTHER INCOME (EXPENSE):
Gain on change in fair value of warrant liability		946,960				—
Interest expense		(3,670,445	)			(357,383	)
Interest income		421,426				7,457
Other income (expense)		(53,028	)			(210,432	)
Net (loss) income before provision for income taxes		(101,958	)			6,968,329
Income tax expense (benefit)		1,173,513				(656,467	)
NET (LOSS) INCOME		(1,275,471	)			7,624,796
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST		73,274				(460,707	)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	($1,348,745		)		$8,085,503
(LOSS) EARNINGS PER SHARE:
(Loss) earnings per share - basic and diluted	($0.02		)		$0.16
Weighted-average stock outstanding—basic and diluted [1]		63,027,246				50,369,350
NET (LOSS) INCOME		(1,275,471	)			7,624,796
Other comprehensive income (loss), net of tax or tax benefit:
Change in fair value of debt (risk adjusted)		7,436				(112,313	)
Comprehensive (loss) income before non-controlling interests		(1,268,035	)			7,512,483
Net and comprehensive income (loss) attributable to non-controlling interests		68,760				(487,638	)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	($1,336,795		)		$8,000,121

[1] The 2023 number of shares outstanding have been retrospectively recast for prior period presented to reflect the outstanding stock of Abacus Life, Inc. as a result of the Business Combination.

ABACUS LIFE, INC. Adjusted Net Income and Adjusted EPS

		Three Months Ended March 31,
		2024					2023
Net income attributable to common stockholders		($1,348,745		)		$8,085,503
	Net income (loss) attributable to noncontrolling interests		73,274				(460,707	)
	Stock based compensation		6,093,371				—
	Amortization expense		1,667,109				—
	Gain on change in fair value of warrant liability		(946,960	)			—
	Tax impact [1]		1,165,902				—
Adjusted Net Income		$6,703,951				$7,624,796
Weighted-average shares of Class A common stock outstanding - basic and diluted [2]			63,027,246				50,369,350
Adjusted EPS - basic and diluted		$0.11				$0.15
Adjusted EPS - basic and diluted		$0.11				$0.15
Adjusted EPS - diluted		$0.11				$0.15

[1] Tax impact represents the permanent difference in tax expense related to the restricted stock awards granted to the CEO due to IRC 162(m) limitations.

[2] The 2023 number of shares outstanding have been retrospectively recast for prior period presented to reflect the outstanding stock of Abacus Life, Inc. as a result of the Business Combination.

ABACUS LIFE, INC. Adjusted EBITDA

		Three Months Ended March 31,
			2024				2023
Net (loss) income		($1,275,471		)		$7,624,796
	Depreciation and amortization expense		1,682,054				1,043
	Income Tax		1,173,513				(656,467	)
	Interest (Expense)		3,670,445				357,383
	Other Income (Expenses)		53,028				210,432
	Interest Income		(421,426	)			(7,457	)
	Gain on change in fair value of warrant liability		(946,960	)			—
	Stock based compensation		6,093,371				—
	Unrealized loss (gain) on investments		(1,164,966	)			(125,220	)
	Loss on change in fair value of debt		2,712,627				953,433
Adjusted EBITDA		$11,576,215				$8,357,943
Adjusted EBITDA Margin			53.9%				81.4%
Net (Loss) Income Margin			-5.9%				74.2%

ABACUS LIFE, INC. Return on Invested Capital (ROIC)

Return on Invested Capital
	For the Period Ended
	March 31, 2024
Total Assets	$376,719,400
Less:
Intangible assets, net	(28,048,028	)
Goodwill	(140,287,000	)
Current Liabilities	(23,835,352	)
Total Invested Capital	$184,549,020
Adjusted Net income	$6,703,951
Adjusted Annualized ROIC	15%

ABACUS LIFE, INC. Return on Equity (ROE)

	For the Period Ended
	March 31, 2024
Total Shareholder Equity	$165,340,772
Adjusted Net income	$6,703,951
Adjusted Annualized ROE	16%

FAQ

<p>What was Abacus Life's total revenue in Q1 2024?</p>

Abacus Life reported a total revenue of $21.5 million in the first quarter of 2024.

<p>What was the percentage growth in the Direct-to-Consumer division for Abacus Life?</p>

Abacus Life experienced a 59% year-over-year growth in the Direct-to-Consumer division.

<p>How much did Abacus Life raise from the issuance of senior notes?</p>

Abacus Life raised $25 million from the issuance of 9.875% Fixed Rate Senior Notes.

<p>What was the adjusted EBITDA for Abacus Life in Q1 2024?</p>

Abacus Life's adjusted EBITDA grew by 38.1% to $11.6 million in the first quarter of 2024.

<p>How many shares did Abacus Life repurchase and at what cost?</p>

Abacus Life repurchased 966 thousand shares of its common stock at an average price of $11.41 on the open market, totaling approximately $11 million.