Company: SWKH
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050155
Chunk: 63

Company: SWK Holdings Corp
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 8
Chunk 63
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 of the current unfunded commitment that will be funded over the remaining contractual life of the commitment and is based on historical data. As of September 30, 2025 and December 31, 2024, the Company had $0.1 million of liabilities for credit losses on off-balance sheet exposures related to unfunded commitments with these liabilities included in accounts payable and accrued liabilities on the condensed consolidated balance sheets. Please refer to Note 7 for further information on the Company's unfunded commitments.During the three months ended June 30, 2024, the Company revised its methodology for calculating the allowance for credit losses to be more directly tied to the individual risk ratings, as determined by management, of finance receivables. This resulted in a re-allocation of the existing allowance and did not have a material impact on the total allowance for credit losses amount. Previously, the Company's quarterly assessment of the allowance included two portfolio pools: Term Loans and Royalties. After the change in methodology these pools are further broken down into individual risk ratings applied to each investment to allow for a more precise method for calculating the allowance for credit losses.

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The following table details the changes in the allowance for credit losses by Term Loans and Royalties (in thousands):Nine Months Ended September 30, 2025Nine Months Ended September 30, 2024Term LoansRoyaltiesTotalTerm LoansRoyaltiesTotalAllowance at beginning of period$7,158 $4,091 $11,249 $9,731 $4,170 $13,901 Unfunded Commitments(125)— (125)— — — Provision (benefit) for credit losses(1,018)(567)(1,585)10,202 575 10,777 Write offs— (1,799)(1,799)(10,335)— (10,335)Allowance at end of period$6,015 $1,725 $7,740 $9,598 $4,745 $14,343 Non-Accrual Finance ReceivablesThe Company originates finance receivables to companies primarily in the life sciences sector. This concentration of credit exposes the Company to a higher degree of risk associated with this sector.On a quarterly basis, the Company evaluates the carrying value of its finance receivables. Recognition of income is suspended, and the finance receivable is placed on non-accrual status when management determines that collection of