Abacus Life Reports Second Quarter 2023 Results

Written by Customer Service on August 14, 2023. Posted in Earnings Releases And Operating Results.

– Revenue Grew 30% Year-over-Year to $18.3 Million –

– Increased Originations Capital Deployment by 88% Year-over-Year to $59.7 Million –

– Net Income Increased 40% Year-over-Year to $6.4 Million –

– Adjusted EBITDA Grew 33% Year-over-Year to $8.8 Million –

ORLANDO, Fla., Aug. 14, 2023 (GLOBE NEWSWIRE) — Abacus Life, Inc. (“Abacus” or the “Company”) (NASDAQ: ABL), a leading buyer of life insurance policies and vertically integrated alternative asset manager specializing in specialty insurance products, today reported results for the second quarter ended June 30, 2023.

“Our strong second quarter results continue to validate Abacus’ differentiated business model and further contribute to our long track record of sustainable and profitable growth,” said Jay Jackson, Chief Executive Officer of Abacus Life. “In addition to our continued progress, we were very pleased to successfully complete our public listing post-quarter end, a milestone for our long-term growth ambitions. Our proven business model, expert team, and our wealth of data and innovative technology positions us well to execute on our strategic initiatives, take advantage of the many exciting opportunities that lie ahead, and ultimately create long-term value for our shareholders.”

Second Quarter 2023 Highlights

Total revenue grew 30% to $18.3 million, compared to $14.1 million in the prior-year period
Originations capital deployment increased 88% to $59.7 million, compared to $31.9 million in the prior-year period; number of policy originations grew 4% to 141, compared to 135 in the prior-year period
Total operating expenses (excluding unrealized gains and losses and change in fair value) were $4.3 million, compared to $4.6 million in the prior-year period
Net income increased 40% to $6.4 million, compared to $4.6 million in the prior-year period
Adjusted EBITDA grew 33% to $8.8 million, compared to $6.6 million in the prior-year period
Adjusted EBITDA margin of 48.4%, compared to 47.0% in the prior-year period
Annualized Return on invested capital (ROIC) for the quarter ended June 30, 2023 of 28.5%
Annualized Return on equity (ROE) for the quarter ended June 30, 2023 of 16.0%

Second Quarter 2023 Results

Active management revenue increased 38% to $11.0 million, compared to $8.0 million in the prior-year period. The increase was primarily attributable to maturities of policies accounted for under the investment method.
Total revenue from portfolio servicing segment was $0.4 million, roughly comparable to the prior-year period.
Originations revenue at Abacus Settlements nearly quadrupled to $2.7 million, compared to $0.7 million in the prior-year period. The increase was primarily attributable to higher pricing on the sale of broker policies which led to higher commission fees.
Related party revenue at Abacus Settlements was $4.1 million, compared to $4.9 million in the prior-year period. The decrease was mainly due to a decrease in Nova Origination sales and transaction fee reimbursements, partially offset by increased LMA Originations services.
Net income increased 40% to $6.4 million, compared to $4.6 million in the prior-year period, driven by strong top-line performance and managing costs efficiently.
Adjusted EBITDA for the quarter grew 33% to $8.8 million, compared to $6.6 million in the prior-year period. The increase was primarily attributable to strong revenue growth, partially offset by higher operating expenses. Adjusted EBITDA margin remained strong at 48.4% for the quarter, compared to 47.0% in the prior-year period.

Liquidity and Capital

As of June 30, 2023, the Company had cash and cash equivalents of $20.6 million, balance sheet policy assets of $66.5 million and outstanding long-term debt at fair value of $66.2 million.

Webcast and Conference Call

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

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

Safe Harbor Statement

Statements made in this press release that are not historical facts, including ‎statements accompanied by words such as “will,” “believe,” “estimate,” “expect,” ‎‎”intend,” “anticipate,” “goals,” “prospects,” or similar words, are forward-looking ‎statements within the meaning of the Private Securities Litigation Reform Act of ‎‎1995 regarding the Company’s plans and performance. These statements are ‎based on management’s estimates, assumptions and projections as of the date of ‎this release and are not guarantees of future performance. Actual results may ‎differ materially from the results expressed or implied in these statements as the ‎result of risks, uncertainties and other factors including, but not limited to: the ‎fact that our loss reserves are bases on estimates and may be inadequate to cover ‎our actual losses; the failure to properly price our insurance policies; the ‎geographic concentration of our business; the cyclical nature of our industry; the ‎impact of regulation on our business; the effects of competition; failing to sustain ‎our relationships with independent agencies; the failure to meet our investment ‎objectives; the inability to acquire additional capital on favorable terms; the ‎effects of acts of terrorism and the factors set forth in the Company’s filings with ‎the Securities and Exchange Commission (the “SEC”), including the Annual ‎Report on Form 10-K and Quarterly Report on Form 10-Q and subsequent ‎periodic reports. The Company cautions you not to place undue reliance on the ‎forward-looking statements contained in this release. Any forward –looking statements speak only as of their dates. The Company does not ‎undertake any obligation to publicly update or revise any forward-looking ‎statements to reflect future events, information or circumstances that arise after ‎the date of this release.‎

About Abacus

Abacus is a leading vertically integrated alternative asset manager specializing in life insurance products. Since 2004, the Company has purchased life insurance policies from consumers seeking liquidity and has actively managed those policies over time (via trading, holding, and/or servicing). With over $2.9 billion in face value of policies purchased, Abacus has helped thousands of clients maximize the value of their life insurance.

Over the past 19 years, the Company has built an institutionalized origination and portfolio management process that is supported by an 84-person team, long-term relationships with 78 institutional partners and 30,000 financial advisors, and the ability to operate in 49 states. The Company has serviced approximately $950 million in policies and has managed assets for large asset managers and third-party investment funds.

Abacus’ leadership team averages 20+ years of experience and consists of innovators since the life settlements industry’s inception in the mid-90s.

The Company is a proud member of the Life Insurance Settlements Association (LISA) and complies with HIPAA and privacy laws to maintain and protect confidentiality of financial, health, and medical information. Abacus is also proud to be a BBB Accredited Business with an A+ rating.

www.Abacuslife.com

Contact:
Abacus Life Investor Relations
investors@abacuslife.com

Abacus Life Public Relations
press@abacuslife.com

ABACUS LIFE, INC.
Condensed Consolidated Balance Sheets

	June 30, 2023 (unaudited)				December 31, 2022
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	20,611,122		$	30,052,823
Accounts receivable		192,595			10,448
Related party receivable		78,310			198,364
Due from affiliates		10,473,748			2,904,646
Other receivables		21,252			–
Prepaid expenses and other current assets		829,595			116,646

Total current assets		32,206,622			33,282,927

Property and equipment, net		177,931			18,617
Intangible assets, net		32,900,000			–
Goodwill		140,287,000			–
Operating right-of-use assets		240,816			77,011
Life settlement policies, at cost		9,889,610			8,716,111
Life settlement policies, at fair value		56,685,617			13,809,352
Available for sale securities, at fair value		1,000,000			1,000,000
Other investments		1,600,000			1,300,000
Due from members and affiliates		75,582			–
State security deposit		206,873			–
Certificate of deposit		262,500			–
Other assets, at fair value		1,801,886			890,829

TOTAL ASSETS	$	277,334,437		$	59,094,847

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accrued expenses	$	524,400		$	–
Accounts payable		401,500			40,014
Operating lease liabilities – current portion		227,561			48,127
Due to members and affiliates		10,415,154			263,785
Due to owners		717,429			–
Contract liabilities – deposits on pending settlements		981,217			–
Accrued transaction costs		182,571			908,256
Other current liabilities		258,759			42,227
Income taxes payable		185,831			–

Total current liabilities		13,894,422			1,302,409

SPV purchase and sale note		25,000,000			–
Long-term debt, at fair value		66,165,396			28,249,653
Operating lease liabilities – noncurrent portion		16,864			29,268
Deferred tax liability		9,320,240			1,363,820
Warrant liability		2,438,600			–

TOTAL LIABILITIES		116,835,522			30,945,150

COMMITMENTS AND CONTINGENCIES (11)

SHAREHOLDERS’ EQUITY (DEFICIT)
Class A common stock, $0.0001 par value; 200,000,000 authorized shares; 62,961,688 shares issued and outstanding		6,296			–
LMA members’ capital		–			50,000
Additional paid-in capital		188,641,886			660,000
Retained earnings/(accumulated deficit)		(29,382,362	)		25,487,323
Accumulated other comprehensive income		877,306			1,052,836
Non-controlling interest		355,789			899,538

Total shareholders’ equity (deficit)		160,498,915			28,149,697

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)	$	277,334,437		$	59,094,847

The accompanying notes are an integral part of these interim condensed consolidated financial statements.


ABACUS LIFE, INC.
Condensed Consolidated Statement of Operations

	Three Months Ended June 30,
		2023			2022

REVENUES:
Portfolio servicing revenue
Related party servicing revenue		329,629		$	419,253
Portfolio Servicing revenue		24,737			169
Total portfolio servicing revenue		354,366			419,422
Active management revenue
Investment Income from life insurance policies held using investment method		8,263,499			5,965,466
Change in fair value of life insurance policies (policies held using fair value method)		2,760,900			2,014,013
Total active management revenue		11,024,399			7,979,479

Total revenues		11,378,765			8,398,901

COST OF REVENUES (excluding depreciation stated below)
Cost of revenue		973,400			666,119
Total cost of revenue		973,400			666,119

Gross Profit		10,405,365			7,732,782

OPERATING EXPENSES:
Sales and marketing		683,841			1,019,498
General and administrative expenses		577,539			5,499
Unrealized gain on life settlement policies		–			–
Loss on change in fair value of debt		1,445,229			333,879
Unrealized loss (gain) on investments		(672,936	)		1,039,022
Depreciation		1,098			1,098
Total operating expenses		2,034,771			2,398,996

Operating Income	$	8,370,594		$	5,333,786

OTHER INCOME (EXPENSE)
Interest (expense)		(584,075	)		–
Interest income		–			–
Other income (expense)		121,601			(127,455	)
Total other income (expense)		(462,474	)		(127,455	)

Net income before provision for income taxes		7,908,120			5,206,331
Provision for income taxes		(1,184,571	)		(120,132	)

NET INCOME		6,723,549			5,086,199

LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST		(26,596	)		406,641

NET INCOME ATTRIBUTABLE TO SHAREHOLDERS		6,750,145			4,679,558

ABACUS SETTLEMENTS, LLC
Condensed Consolidated Statement of Operations

	Three Months Ended June 30
		2023			2022
Origination revenue	$	2,745,339		$	743,388
Related party revenue		4,139,351			4,948,528
Total revenue		6,884,690			5,691,916
Cost of revenue		2,407,021			956,625
Related party cost of revenue		2,490,959			2,615,307
Total cost of revenue		4,897,980			3,571,932
Gross Profit		1,986,710			2,119,984

OPERATING EXPENSES:
General and administrative expenses		2,297,577			2,208,051
Depreciation		2,561			3,048
Total operating expenses		2,300,138			2,211,099

Income (Loss) from operations		(313,428	)		(91,115	)

OTHER INCOME (EXPENSE)
Interest income		1,193			599
Interest (expense)		(5,863	)		–
Other income		–			273
Total other income (expense)		(4,670	)		872
Income (Loss) before provision for income taxes		(318,098	)		(90,243	)
Provision for income taxes		–			–
NET INCOME (LOSS) AND COMPREHENSIVE		(318,098	)		(90,243	)

WEIGHTED-AVERAGE UNITS USED IN COMPUTING NET INCOME (LOSS) PER UNIT:
Basic	$	400			400
Diluted	$	400			400

NET INCOME/(LOSS) PER UNIT:
Basic earnings per unit	$	(795.25	)	$	(225.61	)
Diluted earnings per unit	$	(795.25	)	$	(225.61	)

See accompanying notes to interim condensed consolidated financial statement


PROFORMA COMBINED (ABACUS LIFE, INC. AND ABACUS SETTLEMENTS, LLC)
Condensed Consolidated Statement of Operations

	Q2 2023		Q2 2022	Increase		% Increase

Revenue
Origination Revenue	6,884,690		5,691,916	1,192,774		21	%
Portfolio & Servicing Revenue	354,366		419,422	(65,056	)	(16	%)
Active Management Revenue	11,024,399		7,979,479	3,044,920		38	%
Total Revenue	18,263,455		14,090,817	4,172,638		30	%

Cost of Revenue
Origination Cost of Revenue	4,897,980		3,571,932	1,326,048		37	%
Portfolio & Servicing Cost of Revenue	973,400		666,119	307,281		46	%
Total Cost of Revenue	5,871,380		4,238,051	1,633,329		39	%

Gross Profit	12,392,075		9,852,766	2,539,309		26	%

Expenses
Operating Expenses (Abacus & LMA)	4,334,909		4,610,095	(275,186	)	(6	%)
Other (Income)/Expense	467,144		126,583	340,561		269	%
Income Tax Provision / (Benefit)	1,184,571		120,132	1,064,439		886	%
Non-Controlling Interest Income / (Loss)	(26,596	)	406,641	(433,237	)	(107	%)
Net Income Attributable to Shareholders	6,432,047		4,589,315	1,842,732		40	%

EBITDA	8,833,118		6,619,991	2,213,127		33	%

Capital Deployed through Abacus	59,764,389		31,809,025	27,955,364		88	%
3rd Party Capital Deployed through LMA	20,638,467		46,274,631	(25,636,164	)	(55	%)
Total Capital Deployed	80,402,856		78,083,657	2,319,199		3	%

Abacus Life Reports Second Quarter 2023 Results

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