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 |
|
PortfolioFace Amount
($) |
|
|
12-MonthTrailingBenefits
Realized ($) |
|
|
12-MonthTrailing Premiums Paid
($) |
|
|
12-MonthTrailingBenefits/PremiumCoverage
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
CallahanDirector of CommunicationGWG Holdings, Inc.(612)
746-1935dcallahan@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 EndedSeptember
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
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