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1. Company Snapshot

1.a. Company Description

SWK Holdings Corporation, a specialty finance company that focuses on the healthcare sector.It operates in two segments, Finance Receivables and Pharmaceutical Development.The company provides customized financing solutions to a range of life science companies, including companies in the biotechnology, medical device, medical diagnostics and related tools, animal health, and pharmaceutical industries, as well as institutions and inventors.


It also offers non-discretionary investment advisory services to institutional clients in separately managed accounts to invest in life science finance.In addition, the company engages in the pharmaceutical development, formulation and manufacturing, and licensing business through the Peptelligence platform.Further, it intends to out-license its internal product pipeline to create novel formulations using its proprietary technology to develop treatments for patients and caregivers.


The company was formerly known as Kana Software, Inc.and changed its name to SWK Holdings Corporation in December 2009.SWK Holdings Corporation was founded in 1996 and is headquartered in Dallas, Texas.

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1.b. Last Insights on SWKH

SWK Holdings Corporation's recent performance was driven by the announced acquisition by Runway Growth Finance Corp., which is expected to enhance financial profile and be accretive to net investment income. The company's Q2 2025 earnings release showed a stable financial position, with GAAP net income of $3.5 million. The acquisition accelerates Runway Growth's strategy to diversify and optimize its portfolio, adding high-quality investments in healthcare and life sciences. A law firm is investigating the fairness of the sale to shareholders.

1.c. Company Highlights

2. SWK Holdings' Q2 2025 Earnings: A Simplified Business Model

SWK Holdings reported a GAAP pretax net income of $4.6 million or $0.37 per diluted share for the second quarter of 2025, beating analyst estimates of $0.26. The actual EPS came out at $0.38. The company's non-GAAP adjusted net income and finance segment adjusted non-GAAP net income totaled $4.6 million. The non-GAAP tangible financing book value per share was $18.47, an 11.7% year-over-year increase.

Publication Date: Aug -24

📋 Highlights
  • Shareholder Return:: Sold majority of royalty assets and MOD3 subsidiary, returning $49M to shareholders via $4/share dividend.
  • Non-GAAP Performance:: Adjusted net income totaled $4.6M; tangible book value per share rose 11.7% YoY to $18.47.
  • Healthy Loan Portfolio:: Remaining first-lien term loans are performing, with Q2 results reflecting sustainable earnings power.
  • MOD3 Costs:: No ongoing costs post-sale; normalized SG&A reduced to ~$2M/month, retaining MOD3 shell and IP for monetization.
  • Private Credit Strategy:: Cautious deployment, prioritizing existing borrowers; no material regulatory risks identified in portfolio companies.

Financial Performance

The company's financial performance was driven by the sale of the majority of its royalty assets and MOD3 subsidiary, returning $49 million to shareholders through a $4 per share dividend. The remaining loan book is healthy, and the company believes the second quarter's results are a reasonable proxy for the earnings power of the business going forward. As Jody Staggs mentioned, "Our remaining financial assets are cash, performing first lien term loans, non-performing royalties, public equities warrants, and private warrants and earnouts."

Valuation Metrics

SWK Holdings' current valuation metrics indicate a relatively attractive dividend yield of 27.21%. The Price-to-Book Ratio is 0.73, suggesting the stock may be undervalued. Additionally, the Free Cash Flow Yield is 16.11%, which is a positive sign for investors. The ROE is 6.27%, and the ROIC is 5.98%, indicating a decent return on equity and invested capital.

Business Outlook

The company does not see any material impact from regulatory changes at the FDA affecting its underlying portfolio companies. SWK Holdings has been disciplined and careful in its deployment, adding to existing performing borrowers given its cost of capital. The normalized SG&A is around $2 million, and there are no ongoing costs associated with the MOD3 sale.

Private Credit Market

SWK Holdings has been fairly tempered on the deployment side, and the private credit market is not expected to have a significant impact on the company's business. The company's healthy loan book and disciplined approach to deployment are expected to drive its financial performance going forward.

3. NewsRoom

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Stanley Black & Decker, Inc. (SWK) Presents at Goldman Sachs Industrials and Materials Conference 2025 Transcript

Dec -04

Source: seekingalpha.com

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Stanley Black & Decker, Inc. (SWK) Presents at Baird 55th Annual Global Industrial Conference Transcript

Nov -12

Source: seekingalpha.com

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SWK Holdings Corporation Announces Financial Results for Third Quarter 2025

Nov -06

Source: accessnewswire.com

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Stanley Black & Decker, Inc. (SWK) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

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Stanley Black & Decker (SWK) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates

Nov -04

Source: zacks.com

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Stanley Black & Decker (SWK) Beats Q3 Earnings Estimates

Nov -04

Source: zacks.com

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Wealthfront Advisers LLC Sells 6,477 Shares of Stanley Black & Decker, Inc. $SWK

Nov -03

Source: defenseworld.net

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Y Intercept Hong Kong Ltd Invests $1.47 Million in Stanley Black & Decker, Inc. $SWK

Nov -03

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.24%)

6. Segments

Finance Receivables

Expected Growth: 10.27%

SWK Holdings Corporation's 10.27% growth in finance receivables is driven by strategic acquisitions, expansion into new markets, and a strong focus on pharmaceutical and healthcare investments. Additionally, the company's diversified portfolio and effective risk management strategies have contributed to its growth.

Pharmaceutical Development

Expected Growth: 9.27%

SWK Holdings Corporation's 9.27% growth in Pharmaceutical Development is driven by increasing demand for specialty pharmaceuticals, strategic partnerships, and expansion into new therapeutic areas. Additionally, investments in research and development, regulatory approvals, and a strong pipeline of products contribute to this growth.

Holding Company and Other

Expected Growth: 9.03%

SWK Holdings Corporation's 9.03% growth in Holding Company and Other segments is driven by strategic investments, diversified revenue streams, and effective cost management. The company's ability to identify and capitalize on new opportunities, coupled with its strong financial position, has enabled it to drive growth and increase profitability.

7. Detailed Products

Santarus Pharmaceuticals

Santarus Pharmaceuticals is a specialty biopharmaceutical company that acquires, develops, and commercializes proprietary products that address unmet medical needs.

VeroScience

VeroScience is a specialty biopharmaceutical company that develops and commercializes products for the treatment of diabetes and other metabolic disorders.

Nexus Health Systems

Nexus Health Systems is a specialty pharmaceutical company that develops and commercializes products for the treatment of neurological disorders.

Reliant Pharmaceuticals

Reliant Pharmaceuticals is a specialty pharmaceutical company that develops and commercializes products for the treatment of cardiovascular disease.

Monosol Rx

Monosol Rx is a specialty pharmaceutical company that develops and commercializes products for the treatment of gastrointestinal diseases and disorders.

8. SWK Holdings Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

SWK Holdings Corporation operates in the specialty finance industry, which has a moderate threat of substitutes. While there are alternative financing options available, SWK's specialized financing solutions and strong relationships with its customers mitigate the threat of substitutes.

Bargaining Power Of Customers

SWK Holdings Corporation's customers are primarily healthcare companies and medical providers, which have limited bargaining power due to their reliance on SWK's specialized financing solutions.

Bargaining Power Of Suppliers

SWK Holdings Corporation's suppliers are primarily financial institutions and investors, which have a moderate level of bargaining power due to the competitive nature of the financial services industry.

Threat Of New Entrants

The threat of new entrants in the specialty finance industry is low due to the high barriers to entry, including regulatory requirements and the need for specialized expertise and relationships.

Intensity Of Rivalry

The specialty finance industry is highly competitive, with several established players competing for market share. SWK Holdings Corporation must differentiate itself through its specialized financing solutions and strong customer relationships to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 13.33%
Debt Cost 3.95%
Equity Weight 86.67%
Equity Cost 5.60%
WACC 5.38%
Leverage 15.39%

11. Quality Control: SWK Holdings Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Investcorp Credit Management BDC

A-Score: 6.5/10

Value: 7.8

Growth: 3.8

Quality: 7.3

Yield: 10.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

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Newtek Business Services

A-Score: 6.3/10

Value: 8.2

Growth: 4.2

Quality: 6.1

Yield: 10.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

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SWK Holdings

A-Score: 6.2/10

Value: 6.6

Growth: 3.6

Quality: 8.3

Yield: 10.0

Momentum: 1.5

Volatility: 7.0

1-Year Total Return ->

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Silvercrest Asset Management Group

A-Score: 5.8/10

Value: 6.5

Growth: 3.0

Quality: 6.4

Yield: 8.0

Momentum: 3.0

Volatility: 7.7

1-Year Total Return ->

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Equus Total Return

A-Score: 4.7/10

Value: 8.2

Growth: 3.1

Quality: 4.9

Yield: 0.0

Momentum: 9.5

Volatility: 2.3

1-Year Total Return ->

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BrightSphere

A-Score: 4.6/10

Value: 2.7

Growth: 6.3

Quality: 7.1

Yield: 0.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.15$

Current Price

17.15$

Potential

-0.00%

Expected Cash-Flows