|
MINNEAPOLIS, Nov. 09, 2017 (GLOBE NEWSWIRE) -- GWG Holdings, Inc. (Nasdaq:GWGH), the parent company of GWG Life and Life Epigenetics, a financial services company committed to transforming the life insurance industry through disruptive and innovative products and services, today announced its financial results for the third quarter ended September 30, 2017.
Highlights for the Three Months Ended September 30, 2017
Financial Information
- GAAP
- Total revenue of $14.7 million
- GAAP net loss of $7.6 million1, or $1.31 loss per basic and fully diluted share
- Non-GAAP Financial Measures2
- Adjusted Non-GAAP net income of $5.4 million
Capitalization and Liquidity
- Increased the number of financial advisors authorized to sell our alternative investment products to nearly 6,000 which represents an all-time high for the Company
- Raised $65 million from our alternative investment product offerings, the third consecutive quarter above $50 million
- Expanded our long-term senior credit facility to $300 million creating the capacity to fund premiums on substantially all of the Company’s current portfolio of life insurance for the next 10 years
- Terminated the DZ Bank senior facility
- Redeemed Series I Secured Notes and Series A Preferred Stock, representing the Company’s first two full-cycle investment offerings, and eliminating the potential dilutive impact of the preferred stock
- Reported total liquidity of $136 million3 and total equity of $132 million4 at September 30, 2017, both record amounts for the Company
Life Insurance Secondary Market and Portfolio
- Operationalized elements of our D100 strategy with several life insurance distribution partners, initiating contact with hundreds of life insurance agents representing thousands of potential life insurance policies
- Increased the number of financial advisors and life insurance agents able to source life insurance policies for GWG Life to over 6,400 which is a record for the Company
- Purchased $107 million in policy benefits consisting of 65 policies
- Realized $10 million in policy benefits from eight policies during the quarter, and an additional $15 million in policy benefits from another eight policies since quarter end
- Reported a total portfolio of $1.62 billion in face value of life insurance policy benefits, covering 760 unique lives; representing net year-over-year growth of $351 million or 28 percent
- Realized policy benefits in excess of policy premiums paid (on a trailing 12-month basis) for the fourth consecutive quarter
- Reported year-to-date policy benefits realized of $54.6 million through November 8, 2017 as compared with $43.1 million for the same period in 2016, an increase of 27 percent
Life Epigenetics
- Branded GWG Holdings’ insurtech subsidiary as Life Epigenetics (www.lifeegx.com)
- Introduced Life Epigenetics at the insurance industry’s largest insurtech conference, InsureTech Connect 2017
- Secured two major life insurance companies to test M-Panel technology
- Established a network of suppliers, test facilities and forged epigenetic research relationships with two major universities
- Retained insurance technology and testing executive Michael P. Curran as a senior advisor
“This quarter marks significant progress on the two key initiatives I suggested we would be prepared to report on by year end,” said Jon Sabes, Chief Executive Officer. “Our D100 strategy is taking hold and we are operationalizing aspects of an effort that we believe will lead to robust growth of the secondary market, something absent from the market since 2009. While we have additional work to prove out the veracity and velocity of what this effort will yield, we are encouraged by our progress to date and expect to report year-end results that can provide indications as to future growth. As to our Life Epigenetics subsidiary, we are attracting interest from most of the primary insurance and reinsurance carriers we are speaking with. In addition, we have a commitment from one major primary insurance company to run a scaled test of our M-Panel technology. This is ahead of what I would have expected to report this quarter. I am evermore convinced that epigenetics is destined to become a core part of underwriting for the global life insurance industry and we have the leading technology to commercialize that opportunity.”
“We achieved significant milestones this quarter relative to our long-term goal of creating a large, well-capitalized balance sheet.” said William Acheson, Chief Financial Officer. “Chief among them is the amendment to our senior credit facility which creates additional borrowing capacity and, importantly, the capacity to fund premium payments on substantially all of our current portfolio of life insurance for the next decade. This financing better supports our ability to realize the policy benefits from the portfolio of life insurance assets we own. We also retired our Series I Secured Notes and redeemed our Series A Preferred Stock which further improve our balance sheet and reduces the potential dilutive impact of the preferred stock.”
Third Quarter 2017 Financial Summary
Total revenue for the quarter ended September 30, 2017 was $14.7 million, as compared to $13.9 million for the same period in 2016. Unrealized gain was positively affected by $8.0 million as a result of a change in the discount rate which was partially offset by a charge of $5.4 million relating to the update of life expectancy estimates on certain insured lives within our portfolio. Unrealized gain from policy acquisitions during the third quarter was $7.2 million, as compared to $11.7 million for the same period in 2016, reflecting lower acquisition volumes, quarter over quarter. Realized gain from policy benefits for the third quarter was $7.4 million, as compared to $4.2 million for the same period in 2016. The Company recognized $9.7 million of life insurance policy benefits from eight policies during the quarter, as compared to $5.3 million from four policies for the same period in 2016
Total expenses for the third quarter of 2017 were $21.5 million, as compared to $17.3 million for the same period in 2016. As in prior quarters, the year-on-year increase was due to increased interest and financing costs due to higher debt balances outstanding and increased selling, general and administrative costs as a result of continued investment in headcount and infrastructure. Selling, general and administrative costs increased 3.0 percent as compared sequentially to the second quarter of 2017.
(1) Attributable to common shareholders
(2) We calculate adjusted non-GAAP net income by recognizing the actuarial gain accruing within our life insurance policies at the expected internal rate of return, exclusive of future interest costs, without regard to GAAP fair-value measurements. We net this actuarial gain against our adjusted costs during the same period to calculate adjusted non-GAAP net income.
(3) Includes cash, restricted cash, and policy benefits receivable, if any
(4) Total stockholder’s equity – see September 30, 2017 unaudited consolidated balance sheet
Other Information
Reconciliation of Gain on Life Insurance Policies
| |
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
| |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
| Change in estimated probabilistic cash flows |
|
$ |
12,568,000 |
|
|
$ |
12,955,000 |
|
|
$ |
40,033,000 |
|
|
$ |
34,078,000 |
|
| Unrealized gain on acquisitions |
|
|
7,217,000 |
|
|
|
11,668,000 |
|
|
|
25,863,000 |
|
|
|
29,509,000 |
|
| Premiums and other annual fees |
|
|
(13,174,000 |
) |
|
|
(11,784,000 |
) |
|
|
(36,124,000 |
) |
|
|
(29,225,000 |
) |
| Change in discount rate |
|
|
7,987,000 |
|
|
|
(378,000 |
) |
|
|
12,130,000 |
|
|
|
460,000 |
|
| Change in life expectancy evaluation |
|
|
(5,370,000 |
) |
|
|
(2,285,000 |
) |
|
|
(13,974,000 |
) |
|
|
(3,199,000 |
) |
| Face value of matured policies |
|
|
9,747,000 |
|
|
|
5,300,000 |
|
|
|
39,657,000 |
|
|
|
34,367,000 |
|
| Fair value of matured policies |
|
|
(4,554,000 |
) |
|
|
(1,966,000 |
) |
|
|
(22,468,000 |
) |
|
|
(14,383,000 |
) |
| Gain on life insurance policies, net |
|
$ |
14,421,000 |
|
|
$ |
13,510,000 |
|
|
$ |
45,117,000 |
|
|
$ |
51,607,000 |
|
Life Insurance Portfolio Summary
| Total portfolio face value of policy benefits |
|
$ |
1,622,627,000 |
|
| Average face value per policy |
|
$ |
1,909,000 |
|
| Average face value per insured life |
|
$ |
2,135,000 |
|
| Average age of insured (yrs.)* |
|
|
81.7 |
|
| Average life expectancy estimate (yrs.)* |
|
|
6.9 |
|
| Total number of policies |
|
|
850 |
|
| Number of unique lives |
|
|
760 |
|
| Demographics |
|
|
74% Males; 26% Females |
|
| Number of smokers |
|
|
34 |
|
| Largest policy as % of total portfolio |
|
|
0.82 |
% |
| Average policy as % of total portfolio |
|
|
0.12 |
% |
| Average annual premium as % of face value |
|
|
3.51 |
% |
(*) Weighted average by face amount of policy benefits
Distribution of Policies and Policy Benefits by Current Age of Insured
| |
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total |
|
| Min Age |
|
Max Age |
|
Policies |
|
|
Policy Benefits |
|
|
Wtd. Avg. Life Expectancy (yrs.) |
|
Number of Policies |
|
|
Policy Benefits |
|
| 95 |
|
99 |
|
|
9 |
|
|
$ |
12,642,000 |
|
|
1.2 |
|
|
1.0 |
% |
|
|
0.8 |
% |
| 90 |
|
94 |
|
|
83 |
|
|
$ |
155,515,000 |
|
|
2.8 |
|
|
9.8 |
% |
|
|
9.5 |
% |
| 85 |
|
89 |
|
|
199 |
|
|
$ |
434,311,000 |
|
|
4.7 |
|
|
23.4 |
% |
|
|
26.8 |
% |
| 80 |
|
84 |
|
|
186 |
|
|
$ |
414,508,000 |
|
|
6.6 |
|
|
21.9 |
% |
|
|
25.5 |
% |
| 75 |
|
79 |
|
|
159 |
|
|
$ |
306,210,000 |
|
|
9.2 |
|
|
18.7 |
% |
|
|
18.9 |
% |
| 70 |
|
74 |
|
|
145 |
|
|
$ |
215,788,000 |
|
|
10.6 |
|
|
17.1 |
% |
|
|
13.3 |
% |
| 60 |
|
69 |
|
|
69 |
|
|
$ |
83,653,000 |
|
|
10.2 |
|
|
8.1 |
% |
|
|
5.2 |
% |
| Total |
|
|
|
|
850 |
|
|
$ |
1,622,627,000 |
|
|
6.9 |
|
|
100.0 |
% |
|
|
100.0 |
% |
Life Insurance Portfolio Activity
Insurance policy purchases for the three months ended:
| |
Three Months Ended September 30, |
|
Three Months Ended September 30, |
| |
2017 |
|
2016 |
| |
$ |
|
% |
|
# |
|
% |
|
Avg. Face |
|
$ |
|
% |
|
# |
|
% |
|
Avg. Face |
| Broker5 |
104,137,000 |
|
97.4 |
|
55 |
|
84.6 |
|
1,893,000 |
|
107,467,000 |
|
87.5 |
|
53 |
|
64.6 |
|
2,028,000 |
| Direct6 |
2,734,000 |
|
2.6 |
|
10 |
|
15.4 |
|
273,000 |
|
15,301,000 |
|
12.5 |
|
29 |
|
35.4 |
|
528,000 |
| Total |
106,871,000 |
|
100.0 |
|
65 |
|
100.0 |
|
1,644,000 |
|
122,768,000 |
|
100.0 |
|
82 |
|
100.0 |
|
1,497,000 |
Insurance policy purchases for the nine months ended:
| |
Nine Months Ended September 30, |
|
Nine Months Ended September 30, |
| |
2017 |
|
2016 |
| |
$ |
|
% |
|
# |
|
% |
|
Avg. Face |
|
$ |
|
% |
|
# |
|
% |
|
Avg. Face |
| Broker5 |
256,487,000 |
|
85.4 |
|
147 |
|
78.6 |
|
1,745,000 |
|
326,932,000 |
|
90.4 |
|
178 |
|
72.7 |
|
1,837,000 |
| Direct6 |
43,878,000 |
|
14.6 |
|
40 |
|
21.4 |
|
1,097,000 |
|
34,856,000 |
|
9.6 |
|
67 |
|
27.3 |
|
520,000 |
| Total |
300,365,000 |
|
100.0 |
|
187 |
|
100.0 |
|
1,606,000 |
|
361,788,000 |
|
100.0 |
|
245 |
|
100.0 |
|
1,477,000 |
(5) Life settlement brokers
(6) Includes all direct lead sources
Insurance Benefits Realized
| Three Months Ended |
|
Nine Months Ended |
| September 30, 2017 |
|
September 30, 2016 |
|
September 30, 2017 |
|
September 30, 2016 |
| $ |
|
# |
|
$ |
|
# |
|
$ |
|
# |
|
$ |
|
# |
| 9,747,000 |
|
8 |
|
5,300,000 |
|
4 |
|
39,657,000 |
|
27 |
|
34,367,000 |
|
16 |
Trailing 12-Month Policy Benefits Realized and Premiums Paid
| Quarter End Date |
|
Portfolio
Face Amount ($) |
|
|
12-Month
Trailing
Benefits Realized ($) |
|
|
12-Month
Trailing Premiums Paid ($) |
|
|
12-Month
Trailing
Benefits/Premium
Coverage Ratio |
| December 31, 2014 |
|
|
779,099,000 |
|
|
|
18,050,000 |
|
|
|
23,265,000 |
|
|
|
77.6 |
% |
| March 31, 2015 |
|
|
754,942,000 |
|
|
|
46,675,000 |
|
|
|
23,786,000 |
|
|
|
196.2 |
% |
| June 30, 2015 |
|
|
806,274,000 |
|
|
|
47,125,000 |
|
|
|
24,348,000 |
|
|
|
193.5 |
% |
| September 30, 2015 |
|
|
878,882,000 |
|
|
|
44,482,000 |
|
|
|
25,313,000 |
|
|
|
175.7 |
% |
| December 31, 2015 |
|
|
944,844,000 |
|
|
|
31,232,000 |
|
|
|
26,650,000 |
|
|
|
117.2 |
% |
| March 31, 2016 |
|
|
1,027,821,000 |
|
|
|
21,845,000 |
|
|
|
28,771,000 |
|
|
|
75.9 |
% |
| June 30, 2016 |
|
|
1,154,798,000 |
|
|
|
30,924,000 |
|
|
|
31,891,000 |
|
|
|
97.0 |
% |
| September 30, 2016 |
|
|
1,272,078,000 |
|
|
|
35,867,000 |
|
|
|
37,055,000 |
|
|
|
96.8 |
% |
| December 31, 2016 |
|
|
1,361,675,000 |
|
|
|
48,452,000 |
|
|
|
40,240,000 |
|
|
|
120.4 |
% |
| March 31, 2017 |
|
|
1,447,558,000 |
|
|
|
48,189,000 |
|
|
|
42,753,000 |
|
|
|
112.7 |
% |
| June 30, 2017 |
|
|
1,525,363,000 |
|
|
|
49,295,000 |
|
|
|
45,414,000 |
|
|
|
108.5 |
% |
| September 30, 2017 |
|
|
1,622,627,000 |
|
|
|
53,742,000 |
|
|
|
46,559,000 |
|
|
|
115.4 |
% |
Conference Call Details
Management will host a webcast and conference call today at 5:00 pm Eastern Time to discuss the Company's financial and operating results. The webcast is available at https://edge.media-server.com/m6/p/5c6ni72i For those not viewing the webcast, the conference call number for U.S. participants is (844) 423-9895 and the conference call number for participants outside the U.S. is (716) 247-5865. The conference ID number for both conference call numbers is 9466169. Webcast participants will have to dial in to the conference call line in order to ask live questions of management at the end of the presentation.
A replay of the webcast will be available at https://edge.media-server.com/m6/p/5c6ni72i
About GWG Holdings, Inc.
GWG Holdings, Inc. (Nasdaq:GWGH), the parent company of GWG Life and Life Epigenetics, is a financial services company committed to transforming the life insurance industry through disruptive and innovative products and services. The Company has developed a new suite of options for the life insurance secondary market called LifeCare Xchange (LCX). This new capability provides seniors with the exchange value of their life insurance policies they can apply to long-term care and other post-retirement needs. Life Epigenetics seeks to further transform the industry by applying proprietary M-Panel epigenetic technology to disrupt traditional life insurance underwriting practices. Since 2006, GWG Life has provided seniors over $457 million in exchange value for their life insurance and, as of September 30, 2017, owned a portfolio of over $1.62 billion in face value of policy benefits.
For more information about GWG Holdings, Inc. email info@gwglife.com or visit www.gwgh.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "would," "target" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about our estimates regarding future revenue and financial performance. We may not actually achieve the expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the expectations disclosed in the forward-looking statements we make. More information about potential factors that could affect our business and financial results is contained in our filings with the Securities and Exchange Commission. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the Securities and Exchange Commission. We do not intend, and undertake no duty, to release publicly any updates or revisions to any forward-looking statements contained herein.
Media Contact:
Dan Callahan
Director of Communication
GWG Holdings, Inc.
(612) 746-1935
dcallahan@gwglife.com
| |
| GWG HOLDINGS, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| |
| |
|
September 30,
2017
(unaudited) |
|
|
December 31, 2016 |
|
| A S S E T S |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
115,345,481 |
|
|
$ |
78,486,982 |
|
| Restricted cash |
|
|
5,819,230 |
|
|
|
37,826,596 |
|
| Investment in life insurance policies, at fair value |
|
|
620,097,938 |
|
|
|
511,192,354 |
|
| Secured MCA advances |
|
|
2,623,657 |
|
|
|
5,703,147 |
|
| Life insurance policy benefits receivable |
|
|
14,597,000 |
|
|
|
5,345,000 |
|
| Deferred taxes, net |
|
|
4,384,546 |
|
|
|
- |
|
| Other assets |
|
|
3,824,200 |
|
|
|
4,688,103 |
|
| TOTAL ASSETS |
|
$ |
766,692,052 |
|
|
$ |
643,242,182 |
|
| |
|
|
|
|
|
|
|
|
| L I A B I L I T I E S & S T O C K H O L D E R S’ E Q U I T Y |
|
|
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
|
|
|
|
| Senior Credit Facilities |
|
$ |
201,978,580 |
|
|
$ |
156,064,818 |
|
| Series I Secured Notes |
|
|
- |
|
|
|
16,404,836 |
|
| L Bonds |
|
|
413,060,517 |
|
|
|
381,312,587 |
|
| Accounts payable |
|
|
3,715,236 |
|
|
|
2,226,712 |
|
| Interest payable |
|
|
13,521,174 |
|
|
|
16,160,599 |
|
| Other accrued expenses |
|
|
2,792,521 |
|
|
|
1,676,761 |
|
| Deferred taxes, net |
|
|
- |
|
|
|
2,097,371 |
|
| TOTAL LIABILITIES |
|
|
635,068,028 |
|
|
|
575,943,684 |
|
| |
|
|
|
|
|
|
|
|
| STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| CONVERTIBLE PREFERRED STOCK |
|
|
|
|
|
|
|
|
(par value $0.001; shares authorized 40,000,000; shares outstanding 2,694,725 and
2,640,521; liquidation preference of $20,210,000 and $19,804,000 as of
September 30, 2017 and December 31, 2016, respectively) |
|
|
19,408,980 |
|
|
|
19,701,133 |
|
| |
|
|
|
|
|
|
|
|
| REDEEMABLE PREFERRED STOCK |
|
|
|
|
|
|
|
|
(par value $0.001; shares authorized 100,000; shares outstanding 99,080 and 59,183;
liquidation preference of $99,080,000 and $59,183,000 as of September 30, 2017
and December 31, 2016, respectively) |
|
|
96,106,633 |
|
|
|
59,025,164 |
|
| |
|
|
|
|
|
|
|
|
| SERIES 2 REDEEMABLE PREFERRED STOCK |
|
|
|
|
|
|
|
|
(par value $0.001; shares authorized 150,000; shares outstanding 48,316 and 0;
liquidation preference of $48,316,000 and $0 as of September 30, 2017 and
December 31, 2016, respectively) |
|
|
44,721,747 |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
| COMMON STOCK |
|
|
|
|
|
|
|
|
(par value $0.001: shares authorized 210,000,000; shares issued and outstanding
5,813,555 and 5,980,190 as of September 30, 2017 and December 31, 2016,
respectively) |
|
|
5,814 |
|
|
|
5,980 |
|
| Additional paid-in capital |
|
|
- |
|
|
|
7,383,515 |
|
| Accumulated deficit |
|
|
(28,619,150 |
) |
|
|
(18,817,294 |
) |
| TOTAL STOCKHOLDERS’ EQUITY |
|
|
131,624,024 |
|
|
|
67,298,498 |
|
| |
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES & EQUITY |
|
$ |
766,692,052 |
|
|
$ |
643,242,182 |
|
| GWG HOLDINGS, INC. AND SUBSIDIARIES |
|
| CONSOLIDATED STATEMENTS OF OPERATIONS |
|
| (unaudited) |
|
| |
|
| |
|
Three Months Ended |
|
|
Nine Months Ended |
|
| |
|
September 30,
2017 |
|
|
September 30,
2016 |
|
|
September 30,
2017 |
|
|
September 30,
2016 |
|
| REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
| Gain on life insurance policies, net |
|
$ |
14,421,353 |
|
|
$ |
13,509,755 |
|
|
|
$ |
45,117,438 |
|
|
$ |
51,606,815 |
|
|
| MCA income |
|
|
100,367 |
|
|
|
286,225 |
|
|
|
|
480,526 |
|
|
|
654,441 |
|
|
| Interest and other income |
|
|
175,323 |
|
|
|
124,998 |
|
|
|
|
855,009 |
|
|
|
341,098 |
|
|
| TOTAL REVENUE |
|
|
14,697,043 |
|
|
|
13,920,978 |
|
|
|
|
46,452,973 |
|
|
|
52,602,354 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
13,275,407 |
|
|
|
10,942,790 |
|
|
|
|
38,765,647 |
|
|
|
29,856,601 |
|
|
| Employee compensation and benefits |
|
|
3,792,096 |
|
|
|
2,912,463 |
|
|
|
|
10,696,455 |
|
|
|
8,450,168 |
|
|
| Legal and professional fees |
|
|
1,657,090 |
|
|
|
586,830 |
|
|
|
|
3,934,027 |
|
|
|
3,097,312 |
|
|
| Provision for MCA advances |
|
|
28,000 |
|
|
|
- |
|
|
|
|
906,000 |
|
|
|
400,000 |
|
|
| Other expenses |
|
|
2,771,196 |
|
|
|
2,863,212 |
|
|
|
|
8,434,617 |
|
|
|
7,208,057 |
|
|
| TOTAL EXPENSES |
|
|
21,523,789 |
|
|
|
17,305,295 |
|
|
|
|
62,736,746 |
|
|
|
49,012,138 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| INCOME (LOSS) BEFORE INCOME TAXES |
|
|
(6,826,746 |
) |
|
|
(3,384,317 |
) |
|
|
|
(16,283,773 |
) |
|
|
3,590,216 |
|
|
| INCOME TAX EXPENSE (BENEFIT) |
|
|
(2,764,243 |
) |
|
|
(1,428,130 |
) |
|
|
|
(6,481,917 |
) |
|
|
1,478,617 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET INCOME (LOSS) |
|
|
(4,062,503 |
) |
|
|
(1,956,187 |
) |
|
|
|
(9,801,856 |
) |
|
|
2,111,599 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock dividends |
|
|
3,548,165 |
|
|
|
1,041,178 |
|
|
|
|
7,447,022 |
|
|
|
2,153,333 |
|
|
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS |
|
$ |
(7,610,668 |
) |
|
$ |
(2,997,365 |
) |
|
|
$ |
(17,248,878 |
) |
|
$ |
(41,734 |
) |
|
| NET INCOME (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
$ |
(1.31 |
) |
|
$ |
(0.50 |
) |
|
|
$ |
(2.96 |
) |
|
$ |
(0.01 |
) |
|
| Diluted |
|
$ |
(1.31 |
) |
|
$ |
(0.50 |
) |
|
|
$ |
(2.96 |
) |
|
$ |
(0.01 |
) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
5,797,800 |
|
|
|
5,978,322 |
|
|
|
|
5,829,808 |
|
|
|
5,962,938 |
|
|
| Diluted |
|
|
5,797,800 |
|
|
|
5,978,322 |
|
|
|
|
5,829,808 |
|
|
|
5,962,938 |
|
|
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures for evaluating financial results, planning and forecasting, and maintaining compliance with covenants contained in borrowing agreements. The application of current GAAP fair value standards, especially during a period of significant growth of our portfolio and our Company may result in current period GAAP financial results that may be not be reflective of our long term earnings potential or overall financial condition. Management believes that the Company’s non-GAAP financial measures provide investors an alternative to evaluate our potential long-term earnings performance without regard to the volatility in GAAP financial results that can and does occur during this phase of our portfolio and company growth.
We disclose these non-GAAP financial measures to investors to provide an alternative method for assessing our financial condition and operating results. These non-GAAP financial measures are not in accordance with GAAP and may be different from non-GAAP measures used by other companies, including other companies within our industry. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for comparable amounts prepared in accordance with GAAP. A reconciliation of GAAP to the non-GAAP financial measures described above can be found below.
Adjusted Non-GAAP Net Income. Our DZ Bank/Autobahn senior revolving credit facility (which was terminated on September 12, 2017) required us to maintain a positive net income calculated on an adjusted non-GAAP basis. We calculate our adjusted non-GAAP net income by recognizing the actuarial gain accruing within our life insurance policies at the expected internal rate of return, exclusive of future interest costs, without regard to fair value. We net this actuarial gain against our adjusted costs during the same period to calculate our net income on a non-GAAP basis.
| |
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
| |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
| GAAP net income (loss) attributable to common shareholders |
|
$ |
(7,611,000 |
) |
|
$ |
(2,997,000 |
) |
|
$ |
(17,249,000 |
) |
|
$ |
(42,000 |
) |
| Unrealized fair value gain 7 |
|
|
(20,182,000 |
) |
|
|
(21,073,000 |
) |
|
|
(49,301,000 |
) |
|
|
(53,846,000 |
) |
| Adjusted cost basis increase 8 |
|
|
24,207,000 |
|
|
|
19,948,000 |
|
|
|
68,667,000 |
|
|
|
51,689,000 |
|
| Accrual of unrealized actuarial gain 9 |
|
|
9,032,000 |
|
|
|
11,769,000 |
|
|
|
21,448,000 |
|
|
|
29,339,000 |
|
| Total adjusted non-GAAP net income attributable to common shareholders |
|
$ |
5,446,000 |
|
|
$ |
7,647,000 |
|
|
$ |
23,565,000 |
|
|
$ |
27,140,000 |
|
(7) Reversal of GAAP unrealized fair value gain of life insurance policies
(8) Adjusted cost basis is increased to include those acquisition, financing and servicing expenses that are not capitalized under GAAP (non-GAAP investment cost basis)
(9) Accrual of actuarial gain at the expected internal rate of return, exclusive of future interest costs, based on the non-GAAP investment cost basis for the applicable period
GWG Holdings, Inc.
|
