Company: ACTG
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000934549-25-000021
Chunk: 94

Company: ACACIA RESEARCH CORP
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 1
Chunk 94
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 Change(In thousands, except percentage change values)Change in fair value of equity securities$(4,777)$(26,701)$21,924 (82 %)Gain on sale of equity securities1,605 28,861 (27,256)(94 %)Total net realized and unrealized gain$(3,172)$2,160 $(5,332)(247 %)

Our equity securities investments, including the Life Sciences Portfolio and trading securities portfolio, are recorded at fair value at each balance sheet date. During the first quarter of 2024, Acacia fully exited its position in Arix. Refer to periodic change explanations above. Refer to Notes 2 and 4 to the consolidated financial statements elsewhere herein for additional information regarding our investment in the Life Sciences Portfolio and other equity securities.

Our results included an unrealized loss from the change in fair value of our equity securities, and included realized gain from the sale of our equity securities. These changes were derived from our Life Sciences Portfolio and trading securities portfolio. The 2024 period unrealized loss and realized gain primarily relates to the sale of Arix shares.

Non-recurring legacy legal expense

Three Months EndedMarch 31,20252024$ Change% Change(In thousands, except percentage change values)Non-recurring legacy legal expense$— $(6,243)$6,243 (100 %)

During the three months ended March 31, 2024, we recorded $6.2 million in connection with the AIP Matter in other income (expense) in the condensed consolidated statements of operations.

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Income Taxes

Three Months EndedMarch 31,20252024$ Change% Change(In thousands, except percentage change values)Income tax (expense) benefit$(6,081)$1,109 $(7,190)(648 %)Effective tax rate(21)%85 %n/a(106)%

Our income tax expense for the three months ended March 31, 2025 is primarily attributable to the statutory rate applied to our earnings.  Our income tax benefit for the three months ended March 31, 2024 primarily attributable to recognizing an income tax benefit on losses incurred to date offset by foreign withholding taxes.

Our 2025 effective tax rate was slightly lower than the U.S. federal statutory rate primarily due to non-controlling partnership earning allocated to minority shareholders. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such