FOXO Technologies Inc.
08/14/2026 | Press release | Distributed by Public on 08/14/2026 14:26
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to the "Company," "FOXO," "us," "our" or "we" refer to FOXO Technologies Inc. and its consolidated subsidiaries. The following discussion and analysis summarize the significant factors affecting the consolidated operating results, financial condition, liquidity, capital resources and cash flows of our Company as of and for the periods presented below. You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or events occur in the future.
Formation
We were formed as a limited liability company on November 11, 2019, following our separation from GWG Holdings, Inc. We were previously named InsurTech Holdings, LLC and FOXO BioScience LLC. On November 13, 2020, FOXO Bioscience LLC completed a conversion to a C Corporation and became FOXO.
Effective September 15, 2022, we consummated our previously announced business combination pursuant to the Merger Agreement, whereby DWIN Merger Sub Inc. merged with and into Legacy FOXO, with Legacy FOXO surviving as a wholly-owned subsidiary of the Company. Upon consummation of our business combination, our name changed from Delwinds Insurance Acquisition Corp. to FOXO Technologies Inc.
Overview
As of June 30, 2026, FOXO owns and operates four principal subsidiaries.
Myrtle Recovery Centers, Inc., ("Myrtle") a 30-bed behavioral health facility in East Tennessee. Myrtle provides inpatient services for detox and residential treatment and outpatient services for medication assisted treatment ("MAT") and OBOT Programs.
Rennova Community Health, Inc., ("RCHI") owns and operates Scott County Community Hospital, Inc. ("SCCH") (d/b/a Big South Fork Medical Center ("BSF")), a critical access-designated ("CAH") hospital in East Tennessee.
Vector BioSource Inc. ("Vector") is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries.
FOXO Labs, Inc. is a biotechnology company dedicated to improving human health and life span through the development of cutting-edge technology and product solutions for various industries.
Our Business Segments
We manage and classify our business into three reportable business segments: (i) Healthcare, (ii) Life Science Services and (iii) Labs.
| ● | Healthcare - The Company's healthcare segment includes Myrtle and RCHI's hospital SCCH, doing business as BSF. Myrtle offers behavioral health services, primarily substance use disorder treatments and services that are provided on either an inpatient, residential basis or an outpatient basis. BSF has 25 inpatient beds, and a 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. BSF is designated as a Critical Access Hospital (rural) hospital. |
| ● | Life Science Services - The Company's Life Science Services segment began with the acquisition of Vector on September 19, 2025. Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries. |
| ● | Labs - The Company's Labs segment is commercializing proprietary epigenetic biomarker technology. The Company's innovative biomarker technology enables the adoption of new saliva-based health and wellness biomarker solutions. The Company's research demonstrates that epigenetic biomarkers, collected from saliva, provide measures of individual health and wellness for the factors used in life insurance underwriting traditionally obtained through blood and urine specimens. |
Reverse Stock Splits
On April 17, 2025, the Company's board of directors (pursuant to a previously-obtained shareholder approval) approved the implementation of a 1-for-10 reverse stock split, such that every 10 shares of the Company's Class A Common Stock will be combined into one issued and outstanding share of Class A Common Stock, the First Reverse Stock Split. On July 17, 2025, the Company's board of directors (pursuant to previously-obtained shareholder approval) approved the implementation of a 1-for-1.99 reverse stock split, such that every 1.99 shares of the Company's Class A Common Stock will be combined into one issued and outstanding share of the Company's Class A Common Stock, the Second Reverse Stock Split. On June 30, 2026, the Company's board of directors (pursuant to previously obtained shareholder approval) approved the implementation of a 1-for-3,000 reverse stock split, such that every 3,000 shares of the Company's Class A Common Stock will be combined into one issued and outstanding share of the Company's Class A Common Stock, the Third Reverse Stock Split. The reverse stock splits did not result in a change in the $0.0001 par value per share of the Company's Class A Common Stock.
The First Reverse Stock Split was effective on April 28, 2025. The Second Reverse Stock Split was effective on July 27, 2025. The Third Reverse Stock Split was effective on June 30, 2026.
All share amounts herein have been adjusted to reflect the reverse stock split.
Acquisition of Vector Under Stock Purchase Agreement
On September 9, 2025, the Company entered into the Stock Purchase Agreement with Vector, (the "Vector SPA"), between the stockholders (each, a "Seller," or, together, the "Sellers") owning all of the issued and outstanding equity securities of Vector (the "Purchased Shares") and FOXO Acquisition Corporation, a Florida corporation and wholly-owned subsidiary of the Company ("FAC"), (the "Vector Acquisition"). Pursuant to the SPA, upon closing on September 19, 2025, the Sellers exchanged the Purchased Shares for (i) $500,000 in cash, (ii) 60,000 shares of the Company's Series E Cumulative Redeemable Secured Preferred Stock (the "Series E Preferred Stock") with a stated value of $25.00 per share, or a total stated value of $1,500,000, (iii) 128,950 three year warrants to purchase shares of the Company's Class A Common Stock with an exercise price of $15.51 per share (the "Vector Warrants"), which was equal to the closing price of the Company's Class A Common Stock on the trading day immediately prior to closing, plus 10%, (subject to adjustment) valued at $769,826 and (iv) up to 80,000 shares of Series E Preferred Stock to be issued to the Sellers on or before 120 days after the two-year anniversary of the closing; provided that, such shares will only be issued in the event that the Qualifying Revenue (as defined in the Vector SPA) of the Business (as defined in the Vector SPA) during the 12-month period between the first and second anniversary of the closing are at least $4,000,000; provided, further, that in the event that less than $4,000,000 of Qualifying Revenues are actually collected by Vector on or before 90 days after the second anniversary of the closing, the number of shares of Series E Preferred Stock to be issued to the Sellers will be reduced by an amount equal to one share for each $25.00 of Qualifying Revenues less than $4,000,000 collected by such date; and, provided, further, if a Change of Control (as defined in the Vector SPA) of the Company occurs prior to the two-year anniversary of the closing, all of the up to 80,000 shares of Series E Preferred Stock will be issued to the Sellers as of the date of such Change of Control. Pursuant to the Vector SPA, the Sellers have the right, but not obligation, to repurchase the Purchased Shares under certain limited circumstances at fair market value as determined by a third party and subject to a floor. As of June 30, 2026, the Company has recorded $500,000 of additional contingent purchase price consideration, which amount was based on the estimated value of additional shares of Series E Preferred Stock that will be owed pursuant to current projections of Qualifying Revenue.
Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceutical research industries.
Current Business Strategy
Myrtle Recovery Centers, Inc.
We acquired Myrtle on June 14, 2024 under the terms of a stock exchange agreement with RHI. Myrtle was formed in the second quarter of 2022 to pursue opportunities in the behavioral health sector, including substance abuse treatment, initially in rural markets. Services are provided on either an inpatient, residential basis or an outpatient basis.
Myrtle was granted a license by the Department of Mental Health and Substance Abuse Services of Tennessee to operate an alcohol and drug treatment facility in Oneida, Tennessee. The facility, which is located at BSF's campus, commenced operations and began accepting patients on August 14, 2023. The facility offers alcohol and drug residential detoxification and residential rehabilitation treatment services for up to 30 patients. On November 1, 2023, Myrtle began accepting patients at its OBOT. The OBOT is located adjacent to Myrtle's alcohol and drug treatment facility in Oneida, Tennessee and complements the existing residential rehabilitation and detoxification services offered at Myrtle. On April 11, 2023, Myrtle sold shares of its common stock equivalent to a 1.961% ownership stake in the subsidiary for de minimis value to an unaffiliated individual licensed as a physician in Tennessee. The shares have certain transfer restrictions, including the right of the subsidiary to transfer the shares to another physician licensed in Tennessee for de minimis value. The shares were sold to the individual for Tennessee healthcare regulatory reasons.
We plan to expand the Myrtle business model by acquiring additional operating facilities and by replicating the model in other rural hospital properties or suitable premises.
Rennova Community Health, Inc.
We acquired RCHI on September 10, 2024 under the terms of a stock exchange agreement with RHI. RCHI's wholly-owned subsidiary, SCCH, is an east Tennessee based Critical Access Designated (CAH) 25-bed hospital licensed by the state of Tennessee, offering quality healthcare services for Oneida and the surrounding areas. SCCH is doing business as BSF. BSF consists of a 52,000-square foot hospital building and 6,300-square foot professional building on approximately 4.3 acres. BSF has 25 inpatient beds, and 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. The hospital became operational on August 8, 2017 and it became designated as a Critical Access Hospital (rural) hospital in December 2021, retroactive to June 30, 2021. The hospital first opened in late 1955 and was known as Scott County Community Hospital. The hospital has been operated by RCHI since August 2017.
We plan to grow this division by expansion of services at its BSF campus and acquisitions in targeted areas.
Vector BioSource Inc.
Vector is an information, data and biospecimen sourcing provider serving the biotechnology, clinical research and pharmaceuticals research industries. Vector plans to transform the biospecimen sourcing landscape with an innovative AI-driven platform that it believes will provide researchers' immediate access to bio-samples, including, whole blood samples, bulk serum collections and toxicology urine specimens. The Company is actively pursuing an acquisition in the sector that, if successful, will deliver an FDA-approved collection and processing capability in the US from which Vector can aggressively grow its business. Vector is also actively seeking international sourcing partners that can provide certain (rare) disease state samples for the research and development sector only. Vector has initiated its first agreement with a partner in India and has been successful in sourcing samples from there as well as from Latin America to satisfy certain orders received.
We plan to grow this division by organic expansion of the current business and acquisition of similar or complementary businesses.
FOXO Labs
Our epigenetics subsidiary has been serving as a pioneer in the development and integration of epigenetic biomarkers into state-of-the-art underwriting protocols and consumer engagement tools. We are using next-generation technology to transform human health and longevity.
Epigenetic technology has been proven to provide health, lifestyle, and longevity insights that have never before been accessible to humans-from just a single saliva sample. Using saliva-based epigenetic biomarkers, we are eliminating the need for invasive collection, allowing us to provide scientists with advanced epigenetic testing services and bioinformatic tools that support groundbreaking research.
We believe there is growing demand for direct-to-consumer wellness testing and epigenetic data analysis tools and are concentrating efforts on: (1) our Bioinformatics Services offering, a suite of bioinformatic tools to help researchers process, analyze, and interpret epigenetic data; and (2) research and development in the fields of health and wellness testing powered by machine learning and artificial intelligence (including a potential AI platform for the delivery of health and well-being data-driven insights to individuals, healthcare professionals and third-party service providers). To further these goals, we intend to leverage the extensive epigenetic data we have generated in our clinical trials and the expertise of our team and continue building strategic alliances with new partners in academia, business, healthcare and government. We also intend to frequently evaluate and develop commercialization opportunities for our product and service offerings and our research findings.
On May 27, 2026, the Company, together with its wholly-owned subsidiary, FOXO Labs, entered into a Strategic Technology License Agreement (the "STLA") with Jon R. Sabes, the Company's founder, and LongevityFP Technologies, LLC, a Minnesota limited liability company controlled by Mr. Sabes ("LongevityFP Technologies").
The material terms of the STLA are as follows: (i) License. The Company and FOXO Labs granted LongevityFP Technologies an exclusive, worldwide license to commercialize the Company's Epigenetics intellectual property portfolio, including two issued U.S. patents (U.S. Patent Nos. 11,795,495 and 11,817,214), a 13,000+ individual epigenetic dataset, proprietary machine learning models and algorithms, and related work product and arrangements (collectively, the "Licensed IP"); (ii) Royalty. LongevityFP Technologies will pay the Company a royalty equal to 3% of net revenues derived from commercialization of the Licensed IP, subject to an aggregate cap of $1,300,000; (iii) Acquisition Option. LongevityFP Technologies received an exclusive, irrevocable ten-year option to acquire majority ownership of FOXO Labs. Upon a "Track A" exercise, LongevityFP Technologies acquires 100% of FOXO Labs and issues the Company a preferred membership interest representing 40% of LongevityFP Technologies's fully diluted common equity. Upon a "Track B" exercise, FOXO Labs issues LongevityFP Technologies 60% of FOXO Labs's fully diluted equity, with the Company retaining 40%; (iv) IP Retention. The Company retains ownership of FOXO Labs and the Licensed IP throughout the license period.
Net Revenues
Healthcare generates revenues from hospital and ancillary services as well as substance abuse treatments, including inpatient and outpatient services. Life Science Services generates revenues from sales of biological materials, such as blood and urine to the pharmaceutical and biotechnology research sectors. Labs currently recognizes revenues from collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array.
Results of Operations
Three Months Ended June 30, 2026 and 2025
| Three Months Ended | ||||||||||||||||
| June 30, | Change in | Change in | ||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Net revenues | $ | 4,715,016 | $ | 5,218,373 | $ | (503,357 | ) | -9.65 | % | |||||||
| Operating expenses: | ||||||||||||||||
| Direct costs of revenues | 2,395,326 | 1,975,325 | 420,001 | 21.26 | % | |||||||||||
| Research and development | 23,700 | 40,183 | (16,483 | ) | -41.02 | % | ||||||||||
| Management contingent share plan (forfeiture) expense | (9,129,890 | ) | 18,878 | (9,148,768 | ) | NM | ||||||||||
| Selling, general and administrative expenses | 2,677,438 | 2,616,866 | 60,572 | 2.31 | % | |||||||||||
| Total operating income (expenses) | (4,033,426 | ) | 4,651,252 | (8,684,678 | ) | NM | % | |||||||||
| Income (loss) from operations | 8,748,442 | 567,121 | 8,181,321 | NM | ||||||||||||
| Change in fair value of warrant liabilities | - | 7,576 | (7,576 | ) | -100.00 | % | ||||||||||
| Interest expense | (1,310,833 | ) | (1,008,751 | ) | (302,082 | ) | 29.95 | % | ||||||||
| Gain from legal settlement | 1,648,377 | - | 1,648,377 | 0.00 | % | |||||||||||
| Other non-operating income (expenses), net | (949,093 | ) | (92,252 | ) | (856,841 | ) | NM | % | ||||||||
| Provision for income taxes | - | - | NM | % | ||||||||||||
| Net income (loss), including noncontrolling interest | 8,136,893 | (526,306 | ) | 8,663,199 | NM | |||||||||||
| Noncontrolling interest | 3,192 | 4,285 | (1,093 | ) | -25.51 | % | ||||||||||
| Net income (loss) attributable to FOXO | 8,140,085 | (522,021 | ) | 8,662,106 | NM | |||||||||||
| Preferred stock dividends and deemed dividends | (135,605 | ) | (265,070 | ) | 129,465 | -48.84 | % | |||||||||
| Net income (loss) to common stockholders | $ | 8,004,480 | $ | (787,091 | ) | $ | 8,791,571 | NM | ||||||||
NM - Not Meaningful
Net Revenues. Net revenues were $4.7 million for the three months ended June 30, 2026, compared to $5.2 million for the three months ended June 30, 2025, a decrease of $0.5 million. We attribute the decrease in net revenues for the three months ended June 30, 2026 to RCHI recording $0.6 million of net revenues from the State of Tennessee's Hospital Improvement Plan ("THIP") during the three months ended June 30, 2026 compared to $2.5 million of net revenues from the THIP recorded in the three months ended June 30, 2025. The THIP is designed to increase revenues for hospitals serving TennCare patients. Excluding the impact of the THIP revenues, RCHI's net revenues increased by $1.1 million in the three months ended June 30, 2026 compared to the 2025 period due to increased volume, including an increase in swing-bed patient services. A "swing-bed" is a change in reimbursement status, as the billing status "swings" from billing for acute care services to billing for post-acute skilled nursing services, despite the fact that the patient stays in the same physical location. Partially offsetting the decrease in net revenues was an increase in Myrtle's net revenues of $0.1 million due to increased patient days and Vector's net revenues of $0.2 million. Vector was acquired on September 19, 2025.
Direct Costs of Revenues. Direct costs of revenues were $2.4 million for the three months ended June 30, 2026, compared to $2.0 million of direct costs of revenues for the three months ended June 30, 2025. Myrtle's direct costs of revenues increased by $52,000 and RCHI's increased by $260,000. In addition, Vector, acquired on September 19, 2025, contributed $0.1 million of the increase. As a percentage of net revenues, direct costs of revenues were 51% and 38% for the three months ended June 30, 2026 and 2025, respectively.
Research and Development. Research and development expenses were $23,700 and $40,183 for the three months ended June 30, 2026 and 2025, respectively. We incurred less compensation costs in the 2026 period.
Management Contingent Share Plan. Management Contingent Share Plan forfeiture for the three months ended June 30, 2026 of $9.1 million represents the forfeiture of unvested shares under the plan by the former founder of the Company in connection with the STLA. The expense of $18,878 for the three months ended June 30, 2025 resulted from the partial vesting of a share during the period. As of June 30, 2026, all shares previously issued under the plan have been forfeited.
Selling, General and Administrative. Selling, general and administrative expenses were $2.7 million for the three months ended June 30, 2026, compared to $2.6 million for the three months ended June 30, 2025. We attribute the increase to Vector's selling, general and administrative expenses of $0.3 million and $0.2 million of operating interest on right of use lease obligations, partially offset by decreases in Corporate expenses and Healthcare wages.
Change in Fair Value of Warrant Liabilities. The fair value of warrant liabilities decreased by $0 and $7,576 in the three months ended June 30, 2026 and 2025, respectively. Changes in fair values resulted from changes in the quoted prices of the Public Warrants on the OTC Pink Marketplace. The warrants have no intrinsic value.
Interest Expense. Interest expense was $1.3 million for the three months ended June 30, 2026 compared to $1.0 million for the three months ended June 30, 2025. The increase was due to the increase in notes payable and interest on Medicare cost report settlements during the three months ending June 30, 2026 compared to the 2025 period and $0.4 million of payment default penalties and default interest that was incurred in the three months ended June 30, 2026 compared to $0.3 million in the three months ended June 30, 2025. Partially offsetting the increase in the three months ended June 30, 2026 was $0.2 million of interest on the right-of-use operating lease obligations that is included in selling, general and administrative expenses in the 2026 period.
Gain From Legal Settlement. The gain from legal settlement in the three months ended June 30, 2026 resulted from the reversal of $1.5 million of accrued severance and $0.1 million of accrued legal fees that were no longer owed under the terms of the STLA.
Other Non-Operating Expenses, Net. Other non-operating expenses, net was $0.9 million for the three months ended June 30, 2026, compared to $0.1 million for the three months ended June 30, 2025. The other non-operating expenses, net for the three months ended June 30, 2026 resulted primarily from a $0.8 million 2023 pre-RCHI acquisition Medicare cost report settlement, $0.2 million of penalties and interest for nonpayment of payroll taxes and $68,706 of RCHI additional purchase price, partially offset by $0.1 million of hospital cafeteria income. The other non-operating expenses, net for the three months ended June 30, 2025 resulted primarily from $0.1 million of penalties and interest for nonpayment of payroll taxes.
Net Income (Loss) Attributable to FOXO. Net income attributable to FOXO was $8.1 million for the three months ended June 30, 2026 compared to a net loss attributable to FOXO of $0.5 million for the three months ended June 30, 2025. Excluding the impact of the forfeiture of the unvested Management Contingent Share Plan shares, we incurred a loss from operations of $0.4 million for the three months ended June 30, 2026 compared to income of $0.6 million for the three months ended June 30, 2025. We attribute the change of $1.0 million primarily to the decrease in net revenues in the 2026 period. Also contributing was an increase in direct costs as a percentage of net revenues in the 2026 period. Excluding the impact of the forfeiture of the unvested Management Contingent Share Plan shares, the net loss attributable to FOXO was $1.0 million in the three months ended June 30, 2026 compared to $0.5 million in the comparable 2025 period as the gain from legal settlement partially offset the impact of the decrease in net revenues and the increases in interest expense and other non-operating expenses, net. We recorded declared dividends on our Series E Preferred Stock and deemed dividends from the anti-dilution provisions of preferred stock totaling $0.1 million in the three months ended June 30, 2026 compared to deemed dividends in the three months ended June 30, 2025 of $0.3 million, which resulted from the issuances of and triggers of the down-round provisions of preferred stock. Including these declared and deemed dividends, the net income (loss) to common stockholders was $8.0 million and ($0.8) million for the three months ended June 30, 2026 and 2025, respectively.
Six Months Ended June 30, 2026 and 2025
| Six Months Ended | ||||||||||||||||
| June 30, | Change in | Change in | ||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Net revenues | $ | 9,883,052 | $ | 8,388,293 | $ | 1,494,759 | 17.82 | % | ||||||||
| Operating expenses: | ||||||||||||||||
| Direct costs of revenues | 4,929,539 | 3,879,261 | 1,050,278 | 27.07 | % | |||||||||||
| Research and development | 59,250 | 70,183 | (10,933 | ) | -15.58 | % | ||||||||||
| Management contingent share plan (forfeiture) expense | (9,129,890 | ) | 37,756 | (9,167,646 | ) | NM | ||||||||||
| Selling, general and administrative expenses | 5,552,562 | 5,380,952 | 171,610 | 3.19 | % | |||||||||||
| Total operating expenses | 1,411,461 | 9,368,152 | (7,956,691 | ) | -84.93 | % | ||||||||||
| Income (loss) from operations | 8,471,591 | (979,859 | ) | 9,451,450 | NM | |||||||||||
| Change in fair value of warrant liabilities | - | 39,170 | (39,170 | ) | -100.00 | % | ||||||||||
| Gain from extinguishment of Senior PIK Notes | - | 1,863,834 | (1,863,834 | ) | -100.00 | % | ||||||||||
| Interest expense | (2,283,968 | ) | (1,898,543 | ) | (385,425 | ) | 20.30 | % | ||||||||
| Gain from legal settlements, net | 1,630,127 | - | 1,630,127 | 0.00 | % | |||||||||||
| Other non-operating expenses, net | (1,136,043 | ) | (171,716 | ) | (964,327 | ) | NM | % | ||||||||
| Provision for income taxes | - | - | - | NM | % | |||||||||||
| Net income (loss), including noncontrolling interest | 6,681,707 | (1,147,114 | ) | 7,828,821 | NM | |||||||||||
| Noncontrolling interest | 6,405 | 8,635 | (2,230 | ) | -25.83 | % | ||||||||||
| Net income (loss) attributable to FOXO | 6,688,112 | (1,138,479 | ) | 7,826,591 | NM | |||||||||||
| Preferred stock dividends and deemed dividends | (135,605 | ) | (437,195 | ) | 301,590 | -68.98 | % | |||||||||
| Net income (loss) to common stockholders | $ | 6,552,507 | $ | (1,575,674 | ) | $ | 8,128,181 | NM | ||||||||
NM- Not Meaningful
Net Revenues. Net revenues were $9.9 million for the six months ended June 30, 2026, compared to $8.4 million for the six months ended June 30, 2025. Vector, acquired on September 19, 2025, contributed $0.6 million of the increase, Myrtle contributed approximately $0.3 million of the increase and RCHI contributed approximately $0.6 million of the increase. We attribute the increase in Myrtle's net revenue to increased patient days. Partially offsetting the increase in RCHI's net revenues for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 were net revenues of $1.2 million from the THIP in the six months ended June 30, 2026 compared to net revenues of $2.5 million from the THIP in the six months ended June 30 2025. The THIP is designed to increase revenues for hospitals serving TennCare patients. Excluding the THIP revenue, RCHI's net revenues increased by approximately $1.9 million in the six months ended June 30, 2026 compared to the 2025 period. We attribute the increase in RCHI's net revenues to increased volume, including an increase in swing-bed patient services. A "swing-bed" is a change in reimbursement status, as the billing status "swings" from billing for acute care services to billing for post-acute skilled nursing services, despite the fact that the patient stays in the same physical location.
Direct Costs of Revenues. Direct costs of revenues were $4.9 million and $3.9 million for six months ended June 30, 2026 and 2025, respectively. Vector, acquired on September 19, 2025, contributed $0.4 million of the increase and RCHI's increased by $0.6 million. As a percentage of net revenues, direct costs of net revenues were 50% and 46% for the six months ended June 30, 2026 and 2025, respectively.
Research and Development. Research and development expenses were $59,250 and $70,183 for the six months ended June 30, 2026 and 2025, respectively. We incurred less compensation costs in the 2026 period.
Management Contingent Share Plan. Management Contingent Share Plan forfeiture for the six months ended June 30, 2026 of $9.1 million represents the forfeiture of unvested shares under the plan by the former founder of the Company in connection with the STLA. The expense for the six months ended June 30, 2025 resulted from the partial vesting of a share during the period. As of June 30, 2026, all shares previously issued under the plan have been forfeited.
Selling, General and Administrative. Selling, general and administrative expenses were $5.6 million for the six months ended June 30, 2026, compared to $5.4 million for the six months ended June 30, 2025. We attribute the increase to Vector's selling, general and administrative expenses of $0.5 million and $0.4 million of operating interest on right of use lease obligations, partially offset by a decrease of $0.6 million in Corporate expenses and Healthcare wages.
Change in Fair Value of Warrant Liabilities. The fair value of warrant liabilities decreased by $0 and $39,170 in the six months ended June 30, 2026 and 2025, respectively. Changes in fair values resulted from changes in the quoted prices of the Public Warrants on the OTC Pink Marketplace. The warrants have no intrinsic value.
Gain from Extinguishment of Senior PIK Notes. During the six months ended June 30, 2025, we exchanged $5.4 million of Senior PIK Notes, which included $1.9 million of accrued interest, for $3.5 million of stated value of our Series B Preferred Stock resulting in a gain of $1.9 million.
Interest Expense. Interest expense was $2.3 million for the six months ended June 30, 2026 compared to $1.9 million for the six months ended June 30, 2025. The increase was due to the increase in notes payable and interest on Medicare cost report settlements during the six months ending June 30, 2026 compared to the 2025 period and $0.9 million of default penalties and default interest that was incurred in the six months ended June 30, 2026 compared to default penalties and default interest of $0.3 million that was incurred in the 2025 period. Partially offsetting the increase in the six months ended June 30, 2026 was $0.4 million of interest on the right-of-use operating lease obligations that is included in selling, general and administrative expenses in the 2026 period and interest on the Senior PIK Notes that were exchanged for Series B Preferred Stock in January 2025.
Gain From Legal Settlement, Net. The gain from legal settlement, net in the six months ended June 30, 2026 resulted primarily from the reversal of $1.5 million of accrued severance and $0.1 million of accrued legal fees that were no longer owed under the terms of the STLA.
Other Non-Operating Expenses, Net. Other non-operating expenses, net was $1.1 million for the six months ended June 30, 2026 compared to other non-operating expenses, net of $0.2 million for the six months ended June 30, 2025. The other non-operating expenses, net for the six months ended June 30, 2026 resulted primarily from a $0.8 million 2023 pre-RCHI acquisition Medicare cost report settlement, $0.4 million of penalties and interest for nonpayment of payroll taxes and $0.1 million of RCHI additional purchase price, partially offset by $0.1 million of hospital cafeteria income. The other non-operating expenses, net in the six months ended June 30, 2025 resulted primarily from $0.3 million of penalties and interest for nonpayment of payroll taxes, partially offset by hospital cafeteria income of $0.1 million.
Net Income (Loss) Attributable to FOXO. Net income attributable to FOXO was $6.7 million for the six months ended June 30, 2026 compared to a net loss attributable to FOXO of $1.1 million for the six months ended June 30, 2025. Excluding the impact of the forfeiture of the unvested Management Contingent Share Plan shares, we incurred a loss from operations of $0.7 million for the six months ended June 30, 2026 compared to a loss from operations of $1.0 million for the six months ended June 30, 2025. We attribute the improvement to the increase in net revenues in the 2026 period. Excluding the impact of the forfeiture of the unvested Management Contingent Share Plan shares, the net loss attributable to FOXO was $2.4 million in the six months ended June 30, 2026 compared to $1.1 million in the comparable 2025 period as a result of the increase in total non-operating expenses in the six months ended June 30, 2026 compared to the 2025 period. We recorded declared dividends on our Series E Preferred Stock and deemed dividends from the anti-dilution provisions of our preferred stock totaling $0.1 million the six months ended June 30, 2026 compared to $0.4 million of deemed dividends from the anti-dilution provisions of and the issuances of preferred stock and the triggers of the down round provisions of the Assumed Warrants in the six months ended June 30, 2025. Including these declared and deemed dividends, the net income (loss) to common stockholders was $6.6 million and $(1.6) million for the six months ended June 30, 2026 and 2025, respectively.
Analysis of Segment Results:
The following is an analysis of our results by reportable segment for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. The primary earnings/loss measure used for assessing reportable segment performance is segment income/loss defined as earnings/loss before interest, income taxes, and depreciation and amortization not associated with a specific segment. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs.
Healthcare
|
Three Months Ended June 30, 2026 |
Three Months Ended June 30, 2025 |
Change in $ |
Change in % |
|||||||||||||
| Net revenues | $ | 4,470,352 | $ | 5,210,557 | $ | (740,205 | ) | -14 | % | |||||||
| Operating expenses | (4,915,486 | ) | (3,927,391 | ) | (988,095 | ) | 25 | % | ||||||||
| Noncontrolling interest | 3,192 | 4,285 | (1,093 | ) | -26 | % | ||||||||||
| Segment (Loss) Income | $ | (441,942 | ) | $ | 1,287,451 | $ | (1,729,393 | ) | NM | % | ||||||
NM - Not Meaningful
Net Revenues. Net revenues were $4.5 million and $5.2 million for the three months ended June 30, 2026 and 2025, respectively, a decrease of $0.7 million. Net revenues for the three months ended June 30, 2026, include Myrtle's net revenues of $0.6 million and RCHI's net revenues of $3.9 million. Net revenues for the three months ended June 30, 2025, include Myrtle's net revenues $0.5 million and RCHI's net revenues of $4.7 million. We attribute the decrease in RCHI's net revenues for the three months ended June 30, 2026 compared to the 2025 period to RCHI recording $0.6 million of net revenues from the THIP compared to $2.5 million of net revenues from the THIP recorded in the three months ended June 30, 2025. The THIP is designed to increase revenues for hospitals serving TennCare patients. Excluding the THIP net revenues, Healthcare's net revenue increased by $1.2 million.
Segment (Loss) Income. Segment loss was $0.5 million for the three months ended June 30, 2026, compared to segment income of $1.3 million for the three months ended June 30, 2025. We attribute the change to the decrease in THIP revenues as discussed above.
Life Science Services
|
Three Months Ended June 30, 2026 |
Three Months Ended June 30, 2025 |
Change in $ |
Change in % |
|||||||||||
| Net revenues | $ | 238,462 | $ | - | $ | 238,462 | NM | |||||||
| Operating expenses | (423,956 | ) | - | (423,956 | ) | NM | ||||||||
| Segment Loss | $ | (185,494 | ) | $ | - | $ | (185,494 | ) | NM | |||||
NM = Not meaningful
Net Revenues. Net revenues were $0.2 million for the three months ended June 30, 2026 and represent net revenues from Vector that was acquired on September 19, 2025.
Segment Loss. Segment loss was $0.2 million for the three months ended June 30, 2026 and represents the loss from Vector.
Labs
|
Three Months Ended June 30, 2026 |
Three Months Ended June 30, 2025 |
Change in $ |
Change in % |
|||||||||||||
| Net revenues | $ | 6,202 | $ | 7,816 | $ | (1,614 | ) | -21 | % | |||||||
| Operating expenses | (24,927 | ) | (41,259 | ) | 16,332 | -40 | % | |||||||||
| Segment Loss | $ | (18,725 | ) | $ | (33,443 | ) | $ | 14,718 | -44 | % | ||||||
Net Revenues. Net revenues were $6,202 and $7,816 for the three months ended June 30, 2026 and 2025, respectively. Net revenues consist of commissions and royalty income.
Segment Loss. Segment loss decreased to $18,725 for the three months ended June 30, 2026 compared to a loss of $33,443 for the three months ended June 30, 2025 due to a reduction in compensation-related expenses.
Healthcare
|
Six Months Ended June 30, 2026 |
Six Months Ended June 30, 2025 |
Change in $ |
Change in % |
|||||||||||||
| Net revenues | $ | 9,268,903 | $ | 8,371,988 | $ | 896,915 | 11 | % | ||||||||
| Operating expenses | (9,086,735 | ) | (7,937,770 | ) | (1,148,965 | ) | 14 | % | ||||||||
| Noncontrolling interest | 6,405 | 8,635 | (2,230 | ) | -26 | % | ||||||||||
| Segment Income | $ | 188,573 | $ | 442,853 | $ | (252,050 | ) | -57 | % | |||||||
Net Revenues. Net revenues were $9.3 million for the six months ended June 30, 2026 and represent Myrtle's net revenues of $1.3 million and RCHI's net revenues of $8.0 million. Net revenues for the six months ended June 30, 2025 of $8.4 million represent Myrtle's net revenues of $1.0 million and RCHI's net revenues of $7.4 million. We attribute the increase in RCHI's net revenues to increased volume and an increase in swing-bed patient services. A "swing-bed" is a change in reimbursement status, as the billing status "swings" from billing for acute care services to billing for post-acute skilled nursing services, despite the fact that the patient stays in the same physical location. Partially offsetting the increase in RCHI's net revenues for the six months ended June 30, 2026 compared to the 2025 period were net revenues of $1.2 million from the THIP in the six months ended June 30, 2026 compared to net revenues of $2.5 million from the THIP in the six months ended June 30 2025. The THIP is designed to increase revenues for hospitals serving TennCare patients. Excluding the impact of the THIP net revenues, Healthcare's net revenue increased in the six months ended June 30, 2026 by approximately $2.2 million.
Segment Income. Segment income was $0.2 million for the six months ended June 30, 2026 compared to segment income of $0.4 million for the six months ended June 30, 2025, respectively. We attribute the decrease to the increase in operating expenses, partially offset by an increase in net revenues.
Life Science Services
|
Six Months Ended June 30, 2026 |
Six Months Ended June 30, 2025 |
Change in $ |
Change in % |
|||||||||||
| Net revenues | $ | 599,712 | $ | - | $ | 599,712 | NM | |||||||
| Operating expenses | (923,752 | ) | - | (923,752 | ) | NM | ||||||||
| Segment Loss | $ | (324,040 | ) | $ | - | $ | (324,040 | ) | NM | |||||
NM = Not meaningful
Net Revenues. Net revenues were $0.6 million for the six months ended June 30, 2026 and represent net revenues from Vector that was acquired on September 19, 2025.
Segment Loss. Segment loss was $0.3 million for the six months ended June 30, 2026 and represents the loss from Vector.
Labs
|
Six Months Ended June 30, 2026 |
Six Months Ended June 30, 2025 |
Change in $ |
Change in % |
|||||||||||||
| Net revenues | $ | 14,437 | $ | 16,305 | $ | (1,868 | ) | -11 | % | |||||||
| Operating expenses | (61,683 | ) | (72,753 | ) | 11,070 | -15 | % | |||||||||
| Segment Loss | $ | (47,246 | ) | $ | (56,448 | ) | $ | 9,202 | -16 | % | ||||||
Net Revenues. Net revenues were $14,437 for the six months ended June 30, 2026 compared to $16,305 for the six months ended June 30, 2025. Net revenues consist of commissions and royalty income.
Segment Loss. Segment loss decreased to $47,246 for the six months ended June 30, 2026 from $56,448 for the six months ended June 30, 2025 due primarily to a reduction in compensation-related expenses.
Other Operating Data:
We use Adjusted EBITDA to evaluate our operating performance. Adjusted EBITDA does not represent and should not be considered an alternative to net income as determined by U.S. GAAP, and our calculations thereof may not be comparable to those reported by other companies. We believe Adjusted EBITDA is an important measure of operating performance and provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on U.S. GAAP measures and because it eliminates items that have less bearing on our operating performance. Adjusted EBITDA, as presented herein, is a supplemental measure of our performance that is not required by, or presented in accordance with, U.S. GAAP. We use non-GAAP financial measures as supplements to our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business. Adjusted EBITDA is a measure of operating performance that is not defined by U.S. GAAP and should not be considered a substitute for net income (loss) as determined in accordance with U.S. GAAP.
We reconcile our non-GAAP financial measure to our net income (loss) attributable to FOXO, which is its most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. Adjusted EBITDA is not presented in accordance with U.S. GAAP and should not be considered a substitute for U.S. GAAP. Adjusted EBITDA includes adjustments for provision for income taxes, as applicable, interest income and expense, depreciation and amortization, equity-based compensation/forfeitures, and certain other infrequent and/or unpredictable non-cash charges or benefits, such as impairments, legal settlements, extinguishment of debt, changes in fair value of warrant liabilities, adjustments for right-of-use operating lease expense and adjustments to include pro forma operating performance of acquisitions as if they had occurred at the beginning of the earliest period presented.
Adjusted EBITDA
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Income (loss) attributable to FOXO | $ | 8,140,085 | $ | (522,021 | ) | $ | 6,688,112 | $ | (1,138,479 | ) | ||||||
| Add: Depreciation and amortization | 175,793 | 146,774 | 346,887 | 289,818 | ||||||||||||
| Add: Interest expense, excluding interest for right-of-use obligations | 1,310,833 | 792,718 | 2,283,968 | 1,462,024 | ||||||||||||
| Add: Equity-based compensation (forfeiture) expense | (9,129,890 | ) | 18,878 | (9,129,890 | ) | 46,594 | ||||||||||
| Add: Gain from extinguishment of debt | - | - | - | (1,863,834 | ) | |||||||||||
| Add: Gain from legal settlements, net | (1,648,377 | ) | - | (1,630,127 | ) | - | ||||||||||
| Add: Change in fair value of warrant liability | - | (7,576 | ) | - | (39,170 | ) | ||||||||||
| Add: Amortization of consulting fees paid in stock | - | 115,686 | 212,590 | |||||||||||||
|
Add: 2023 pre-acquisition RCHI Medicare cost report settlement |
750,767 |
- |
750,767 |
- |
||||||||||||
| Add: Interest expense for right-of-use obligations | 193,727 | 216,033 | 393,595 | 436,519 | ||||||||||||
| Subtotal | (207,062 | ) | 760,492 | (296,688 | ) | (593,938 | ) | |||||||||
| Add: Right-of-use operating lease expense (pro forma for Vector for 2025) | (312,688 | ) | (301,065 | ) | (622,754 | ) | (602,130 | ) | ||||||||
| Add: Pro forma 2025 adjusted EBITDA for Vector | - | 2,554 | - | (11,580 | ) | |||||||||||
| Adjusted EBITDA | $ | (519,750 | ) | $ | 461,981 | $ | (919,442 | ) | $ | (1,207,648 | ) | |||||
See also the Management's Discussion and Analysis of Financial Condition and Results of Operations for the comparisons of net revenues for the three and six months ended June 30, 2026 and 2025.
Liquidity and Capital Resources
Sources of Liquidity and Capital
For the six months ended June 30, 2026 and 2025, we incurred net income (loss) attributable to FOXO of $6.7 million and $(1.1) million, respectively. However, excluding the impact of the non-cash Management Contingent Share Plan forfeiture, the Company incurred a net loss attributable to FOXO of $2.4 million for the six months ended June 30, 2026. As of June 30, 2026, we had a working capital deficit of $35.9 million. Cash used in operations was $0.3 million and $3.7 million for the six months ended June 30, 2026 and 2025, respectively. We expect to incur additional losses in future periods. Our current revenue and operating cash flow is not adequate to fund our operations for the next twelve months and requires us to fund our business through other sources until the time we achieve adequate scale. Securing additional capital is necessary to execute our business strategy.
Third Party Promissory Notes Payable
As of June 30, 2026, the total principal balance of third-party promissory notes payable was $11.6 million, which was net of $0.1 million of debt discounts. In addition, $0.2 million of accrued interest was owed on these notes.
During the six months ended June 30, 2026, we issued nine third-party promissory notes with principal balances totaling $1.6 million and we received net proceeds from the issuances of $1.3 million. In addition, as discussed below, we exchanged 7,775 shares of our Series A Preferred Stock for $7.8 million of aggregated principal balance of two, non-convertible and noninterest bearing promissory notes.
During the six months ended June 30, 2026, we issued 50,000 shares of our Class A Common Stock valued at $15,000 as an inducement to the issuance of a promissory note with a principal balance of $115,000 dated March 2, 2026, and on April 27, 2026, we issued an additional 50,000 shares of our common stock valued at $15,000 for the extension of the maturity date of the promissory note.
During the six months ended June 30, 2025, we issued 330 shares of our Class A Common Stock for conversions and exchanges of $1.9 million of promissory notes payable and related accrued interest, including the Western Note Payable ("the Western Note") discussed below. In addition, during the six months ended June 30, 2025, we issued 11 shares of our Class A Common Stock as inducements and commitment shares under the terms of various promissory notes
In February 2025, the Western Note, which we assumed when we acquired SCCH, was sold to a new third party holder, Silverback Capital Corporation ("Silverback"), and it was amended and restated. Per the terms of the amendment and restatement, the principal balance of the note, which included previously accrued interest expense, totaled $1.1 million, the maturity date was February 26, 2026 and the note was convertible into shares of our Class A Common Stock at a conversion price equal to 90% of the average VWAP for the five trading days prior to conversion. During the six months ended June 30, 2025, Silverback converted $0.5 million of the principal balance of the Western Note into 106 shares of our Class A Common Stock leaving a principal balance outstanding of $0.6 million. The Western Note is currently in default as Silverback failed to make further payments to Western Healthcare, LLC and it is probable that no further conversions of the principal balance into shares of our Class A Common Stock will take place.
In January 2025, we exchanged all outstanding Senior PIK Notes (including all accrued and unpaid interest) (which total value was $5.4 million on the date of the exchange) into 3,457.5 shares of our Series B Preferred Stock with a total stated value of $3.5 million. As a result of the exchange, during the six months ended June 30, 2025, the Company recorded a gain from extinguishment of the Senior PIK Notes of $1.9 million,
At June 30, 2026, $2.4 million of the outstanding principal balance and associated one-time accrued interest of third-party promissory notes (excluding the Western Note, which was purchased by a third party that failed to make further payments to Western Healthcare LLC and it is probable that no further conversions of the principal balance into shares of our Class A Common Stock will take place) were convertible into 8.8 million shares of our Class A Common Stock per the conversion terms of the notes. Each of these notes is more fully discussed in Note 9 to the accompanying unaudited condensed consolidated financial statements.
Related Party Promissory Notes and Loans Payable
On September 10, 2024, we issued a note payable that had a maturity date of September 10, 2026 to RHI in the principal amount of $22.0 million for the purchase of RCHI. During December, 2024, we exchanged $21.0 million of the promissory note owed to RHI for 21,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share and we issued to RHI a new promissory note in the principal amount of $1.0 million due on June 5, 2025. At June 30, 2026, the note is in default and the Company is in discussions with RHI about extending the maturity date of the note which extension we expect to receive. During the year ended December 31, 2025, we issued an additional note payable to RHI in the principal amount of $6.1 million for additional purchase price consideration for the purchase of RCHI, of which $5.0 million was exchanged for 5,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share on August 18, 2025 leaving an additional note due to RHI at December 31, 2025 of $1.1 million. During the six months ended June 30, 2026, we increased the additional note payable to RHI by $0.1 million for additional purchase price consideration for the purchase of RCHI for a balance of $1.2 million at June 30, 2026.
In addition, to the notes and loan discussed in the paragraph above, we have outstanding at June 30, 2026: (i) a note payable to RHI in the amount of $264,565 for the purchase of Myrtle; (ii) a note payable to RHI in the original amount of $1.6 million, which was the amount owed by Myrtle to RHI on the date that we acquired Myrtle, which balance was $1.3 million at June 30, 2026; (iii) a loans payable to RHI in the amount of $1.0 million for working capital purposes; and (iv) we have outstanding at June 30, 2026, three additional promissory notes payable to related parties totaling $0.8 million. The total amount of notes and loans payable owed to RHI and its subsidiaries from the Company and its subsidiaries at June 30, 2026 was $4.7 million. Each of these notes is more fully discussed in Note 9 to the accompanying unaudited condensed consolidated financial statements.
Other Loans
At June 30, 2026, we had outstanding a loan issued under an accounts receivable sales agreement of $22,131 and a credit line assumed in the acquisition of Vector with a balance of $20,827.
Preferred Stock
As of June 30, 2026, we had outstanding shares of preferred stock consisting of: (i) 11,420 shares of our Series A Preferred Stock that were issued for the purchase of RCHI and for cash investment, which amount is net of conversions into common stock and exchanges for notes payable; (ii) 3,245 shares of our Series B Preferred Stock that were issued in exchange for the Senior PIK Notes; (iii) 304 shares of our Series C Preferred Stock, a portion of which were issued for cash and a portion of which were issued in exchange of our Series B Preferred Stock; (iv) 4,712 shares of our Series D Preferred Stock of which 4,312 were issued for settlement of legal fees and accrued expenses and 400 shares that were issued in lieu of common stock for finder's fees in connection with debt financings; and (v) 68,000 shares of our Series E Preferred Stock, 60,000 of which were issued for the acquisition of Vector and 8,000 of which were issued to RHI for payment of $0.2 million of a note payable. All our outstanding shares of preferred stock have a stated value of $1,000 per share except for our Series E Preferred Stock, which has a stated value of $25 per share.
During the six months ended June 30, 2026, we issued 400 shares of our Series D Preferred Stock to satisfy our obligation for outstanding finder's fees payable in connection with debt financings. During the six months ended June 30, 2025, we issued 3,400 shares of our Series A Preferred Stock with a total stated value of$3.4 million ($1,000 per share) and received gross proceeds of $3.35 million and incurred issuance costs of $350,000. In addition, we issued 60 shares of our Series C Preferred Stock for net cash of $44,825 during the six months ended June 30, 2025. During the six months ended June 30, 2026 and 2025, we issued 488,666 shares and 2,854 shares of our Class A Common Stock, respectively, pursuant to conversions of 146.6 shares and 6,290.17 shares of our Series A Preferred Stock, respectively, with stated values totaling $146,600 and $6.3 million, respectively.
Series A Preferred Stock Restructuring with Institutional Investors
On May 12, 2026, two institutional investors owning approximately 5,307 and 2,468 shares of our Series A Preferred Stock, with aggregate stated values of approximately $5.3 million and $2.5 million, respectively, exchanged their shares for the Senior Notes with principal amounts equal to the stated values of the exchanged preferred shares, or approximately $5.3 million and $2.5 million, respectively, for a combined aggregate principal amount of approximately $7.8 million. The Senior Notes are nonconvertible, noninterest bearing and mature on May 12, 2027.
Going Concern
Our primary uses of cash are to fund our operations as we continue to grow our business, including Vector that we acquired on September 19, 2025, as well as to service our debt. Capital expenditures have historically not been material to our consolidated operations, and we do not anticipate making material capital expenditures over the next 12 months unless we secure additional capital to expand the current operations. We expect that our liquidity requirements will continue to consist of working capital, including payments of outstanding debt and accrued liabilities and general corporate expenses associated with the growth of our business. Based on the size of our current operations, we do not have sufficient capital to fund our corporate overhead for at least 12 months from the date hereof. We expect to address our liquidity needs through the pursuit of additional funding through a combination of equity or debt financing and additional strategic acquisitions that we expect will contribute to positive cash flow to enable us to fund our operations. Completing such acquisitions requires significant additional capital that has not yet been secured.
We have taken various actions to bolster our cash position, including raising funds through the private placements and the issuances of promissory notes and other loans, and conserving cash by issuing shares of our preferred stock and shares of our Class A Common Stock under exchange agreements, license agreements, legal settlements, consulting agreements, finder's fees related to equity and debt financing and consulting agreements, among other transactions, as an alternative to paying in cash.
Based on our current operating plan, our cash position as of June 30, 2026, and after taking into account the actions described above, we do not expect to be able to fund our operations through the twelve months ended June 30, 2027 without the need for additional financing or other increases in our cash and cash equivalents balances to enable us to fund our future operations.
We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect, in which case we would be required to obtain additional financing sooner than currently projected, which funding may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We may raise additional capital through equity offerings, debt financings or other capital sources. If we do raise additional capital through public or private equity offerings, or convertible debt offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely impact our existing stockholders' rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take certain actions.
The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The following table presents our capital resources as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, |
Change Increase |
||||||||||
| 2026 | 2025 | (Decrease) | ||||||||||
| Cash | $ | 58,409 | $ | 207,453 | $ | (149,044 | ) | |||||
| Working capital (deficit) | (35,853,244 | ) | (25,546,280 | ) | 10,306,964 | |||||||
| Total debt, net of discounts of $100,874 and $119,122, respectively | 17,207,576 | 7,292,040 | 9,915,536 | |||||||||
| Total stockholders' equity | 913,219 | 11,076,300 | (10,163,081 | ) | ||||||||
The following table summarizes our cash flow data for the six months ended June 30, 2026 and 2025:
|
Cash Provided by/ (Used in) |
||||||||
| Six Months Ended June 30, | 2026 | 2025 | ||||||
| Operating Activities | $ | (279,224 | ) | $ | (3,716,303 | ) | ||
| Investing Activities | $ | (9,374 | ) | $ | (14,900 | ) | ||
| Financing Activities | $ | 139,554 | $ | 3,984,724 | ||||
Operating Activities
Our net cash used in operating activities in the six months ended June 30, 2026 was $0.3 million compared to $3.7 million, or $3.4 million less than was used in the six months ended June 30, 2025. Our sources of cash in the six months ended June 30, 2026 were primarily accounts payable and accrued expenses, which provided more operating cash than in the 2025 period.
Investing Activities
Investing activities used $9,374 and $14,900 in the six months ended June 30, 2026 and 2025, respectively. The cash used in investing activities resulted from purchases of property and equipment.
Financing Activities
Net cash provided by financing activities for six months ended June 30, 2026 was $0.1 million compared to $4.0 million for the six months ended June 30, 2025. Net cash provided by financing activities for the six months ended June 30, 2026, included $1.3 million from the issuances of third party notes payable and $2.1 million of borrowings from related party loans and note payable, partially offset by $2.4 million of payments of related party loans and note payable, $0.7 million of payments of third party notes payable and $0.2 million of payments on other loans. Net cash provided by financing activities for the six months ended June 30, 2025, included $3.1 million from the issuances of preferred stock, $1.1 million from the issuances of third party notes payable and $0.3 million from other loans, partially offset by $0.3 million of payments on other loans and $0.1 million of payments of third party notes payable.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.
Critical Accounting Policies
The preparation of the consolidated financial statements and related notes included under "Item 1. Financial Statements" and related disclosures in conformity with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires the selection of the appropriate accounting principles to be applied and the judgments and assumptions on which to base accounting estimates, which affect the reported amounts of assets and liabilities as of the date of the balance sheets, the reported amounts of revenue and expenses during the reporting periods, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances at the time such estimates are made. Actual results and outcomes may differ materially from our estimates, judgments, and assumptions. We periodically review our estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in estimate.
We define our critical accounting policies and estimates as those that require us to make subjective judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. We believe the critical accounting policies used in the preparation of our financial statements which require significant estimates and judgments are as follows:
IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS
Goodwill is required to be tested annually or whenever events have occurred that suggest that goodwill may be impaired. Goodwill is tested at the reporting unit level. The Company has three reporting units: Myrtle, SCCH and Vector. Step 0 in the goodwill impairment test model is to perform a qualitative analysis. This step is not required but can be applied to determine if it is more likely than not that an impairment has occurred. Step 1 is to perform a quantitative analysis to determine a reporting unit's fair value and to compare the fair value to the reporting unit's carrying value. If the carrying value exceeds the unit's fair value, a goodwill impairment is recorded to adjust the unit's carrying value to fair value.
The Company reviews its intangible assets to determine potential impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. For intangible assets, recoverability is measured by comparing the carrying amount of the asset group with the future undiscounted cash flows the assets are expected to generate. Considerable management judgment is necessary to estimate future cash flows. Accordingly, actual results could vary significantly from such estimates. If such assets are considered impaired, an impairment loss is measured by comparing the amount by which the carrying value exceeds the fair value of the long-lived assets.
REVENUE RECOGNITION POLICY
The Company recognizes revenue in accordance with ASC, "Revenue from Contracts with Customers (Topic 606)," including subsequently issued updates. Under the accounting guidance, revenues are presented net of estimated contractual allowances and estimated implicit price concessions.
Healthcare
The Company's healthcare segment consists of the operations of Myrtle and of RCHI.
Myrtle's revenues relate to contracts with patients in which its performance obligations are to provide behavioral health care services to its patients. Revenues are recorded during the period in which its obligations to provide health care services are satisfied. Myrtle's performance obligations for inpatient services are generally satisfied over periods averaging approximately 7 to 28 days depending on the service line, and revenues are recognized based on charges incurred. The contractual relationships with patients, in most cases, also involve third-party payers and the transaction prices for the services provided are dependent upon the terms provided by or negotiated with the third-party payers. The payment arrangements with third-party payers for the services Myrtle provides to its patients typically specify payments at amounts less than its standard charges. Services provided to patients are generally paid at prospectively determined rates per diem.
RCHI's revenues relate to contracts with patients of BSF in which its performance obligations are to provide health care services to the patients. Revenues are recorded during the period its obligations to provide health care services are satisfied. Its performance obligations for inpatient services are generally satisfied over periods averaging approximately three days, and revenues are recognized based on charges incurred. Its performance obligations for outpatient services, including emergency room-related services, are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies) and the transaction prices for the services provided are dependent upon the terms provided by Medicare and Medicaid or negotiated with managed care health plans and commercial insurance companies. The payment arrangements with third-party payers for the services it provides to the related patients typically specify payments at amounts less than our standard charges. Medicare, because of BSF's designation as a critical access care hospital, generally pays for inpatient and outpatient services at rates related to the hospital's costs. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates.
Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation. Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are determined (in relation to certain government programs, primarily Medicare, this is generally referred to as the "cost report" filing and settlement process). As of June 30, 2026 and December 31, 2025, $2.3 million and $1.9 million, respectively, of Medicare cost report settlement liabilities were recorded.
Management continually reviews the contractual estimation process to consider the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. Under the revenue recognition accounting guidance, revenues are presented net of estimated contractual allowances and estimated implicit price concessions. The healthcare segment's net revenues are based upon the estimated amounts it expects to be entitled to receive from third-party payers and patients based, in part, on Medicare and Medicaid rates as discussed above as for each of Myrtle and BSF. The healthcare segment also records estimated implicit price concessions related to uninsured accounts to record self-pay revenues at the estimated amounts it expects to collect.
The collection of outstanding receivables is the healthcare segment's primary source of operating cash and is critical to its operating performance. The primary collection risks relate to patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Accounts are written off when all reasonable internal and external collection efforts have been carried out. The estimates for implicit price concessions are based upon management's assessment of historical write-offs and expected net collections, business and economic conditions and other collection indicators.
Life Science Services
Our Life Science Services segment's revenue consists of revenue from Vector, which was acquired on September 19, 2025. The Company recognizes revenue from the sale of high-quality bio-samples and bulk biological materials for every stage of life science research in accordance with ASC 606. As a result of applying this five-step model under ASC 606, the Company recognizes revenues from its sale of products upon their transfer of control to the customer, which is considered complete at either the time of shipment or arrival at destination based upon agreed upon terms within the contract. The Company's payment terms for the sale of standard products are typically 30 to 60 days.
Labs
The Company has recorded minor revenues from its Labs segment during the three and six months ended June 30, 2026 and 2025. Labs currently recognizes revenue from collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array. The Company applies judgment in determining the customer's ability and intention to pay based on a variety of factors including the customer's historical payment experience.
CONTRACTUAL ALLOWANCES AND DOUBTFUL ACCOUNTS POLICY
In accordance with ASC, "Revenue from Contracts with Customers (Topic 606)," including subsequently issued updates, the Company does not present "allowances for doubtful accounts" on its balance sheets, rather its accounts receivable are reported at realizable value, net of estimated contractual allowances and estimated implicit price concessions (also referred to as doubtful accounts), which are estimated and recorded in the period the related revenue is recorded. ASC, "Financial Instruments Credit Losses (Topic 326)," requires that healthcare organizations estimate credit losses on a forward-looking basis taking into account historical collection and payer reimbursement experience as an integral part of the estimation process related to contractual allowances and doubtful accounts. Receivables deemed to be uncollectible are charged against the allowance for doubtful accounts after all collection efforts have ceased or the account is settled for less than the amount originally estimated to be collected. Recoveries of receivables previously written-off are recorded as credits to the allowance for doubtful accounts. Revisions to the allowances for doubtful accounts are recorded as adjustments to revenues.
During the three months ended June 30, 2026 and 2025, estimated contractual allowances and implicit price concessions of $21.1 million and $ 17.2 million, respectively, have been recorded as reductions to revenues and accounts receivable balances to enable the Company to record its revenues and accounts receivable at the estimated amounts it expects to collect and during the six months ended June 30, 2026 and 2025, estimated contractual allowances and implicit price concessions of $40.6 million and $34.7 million, respectively, have been recorded as reductions to revenues and accounts receivable balances to enable the Company to record its revenues and accounts receivable at the estimated amounts it expects to collect. As required by Topic 606, after deducting estimated contractual allowances and implicit price concessions from the healthcare segment's revenues for the three months ended June 30, 2026 and 2025, the Company recorded healthcare net revenues of $4.5 million and $5.2 million, respectively and for the six months ended June 30, 2026 and 2025, $9.3 million and $8.4 million, respectively. The Company continues to review the provisions for contractual allowances and implicit price concessions.
BUSINESS COMBINATIONS
The Company follows the guidance in ASC 805, Business Combinations for determining the appropriate accounting treatment for business acquisitions. Under ASC 805, the assets acquired, and liabilities assumed are recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company. The excess of the purchase prices over the aggregate fair value of the tangible assets acquired and liabilities assumed is treated as goodwill in accordance with ASC 805. During the measurement period or until valuation studies are completed, the provisional amounts used for the purchase price allocation are subject to adjustments for a period not to exceed one year from the date of acquisition. Acquisition costs are expensed as incurred.
Going Concern
On a quarterly basis, we assess going concern uncertainty for our consolidated financial statements to determine if we have sufficient cash and cash equivalents on hand and working capital to operate for a period of at least one year from the date our consolidated financial statements are issued or are available to be issued (the "look-forward period"). Based on conditions that are known and reasonably knowable to us, we consider various scenarios, forecasts, projections, and estimates, and we make certain key assumptions, including the timing and nature of projected cash expenditures or programs, among other factors, and our ability to delay or curtail those expenditures or programs within the look-forward period, if necessary. Until additional equity or debt capital is secured, there is substantial doubt about the Company's ability to continue as a going concern.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-04, Debt with Conversions and Other Options (Subtopic 470-20), Induced Conversions of Convertible Debt Instruments. The amendments in this ASU clarify when the settlement of a debt instrument should be accounted for as an induced conversion. Under this ASU, (a) to be accounted for as an induced conversion, an inducement offer is required to preserve the form and amount of consideration issuable upon conversion in accordance with the terms of the instrument (rather than only the equity securities issuable upon conversion), (b) whether a settlement of convertible debt is an induced conversion should be assessed as of the date the inducement offer is accepted by the holder, and (c) issuers that have exchanged or modified a convertible debt instrument within the preceding 12 months (that did not result in extinguishment accounting) should use the terms that existed 12 months before the inducement offer was accepted when determining whether induced conversion accounting should be applied. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06. The amendments in this ASU permit an entity to apply the new guidance on either a prospective or a retrospective basis. The adoption of this ASU did not have an impact on the Company's financial statements for the three and six months ended June 30, 2026 and 2025.
In September 2025, the FASB issued ASU 2025-07, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40). The target of this update is accounting for internal use software. The amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as "project stages") throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as "significant development uncertainty"). The two factors to consider in determining whether there is significant development uncertainty are whether: 1. The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing. 2. The entity has determined what it needs the software to do (for example, functions or features), including whether the entity has identified or continues to substantially revise the software's significant performance requirements. The amendments in this Update specify that the disclosures in Subtopic 360-10, Property, Plant, and Equipment-Overall, are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. Furthermore, the amendments in this Update supersede the website development costs guidance and incorporate the recognition requirements for website-specific development costs from Subtopic 350-50 into Subtopic 350-40. Under current GAAP, entities are required to capitalize development costs incurred for internal-use software depending on the nature of the costs and the project stage during which they occur. The amendments in this ASU improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods, including methods that entities may use to develop software in the future. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The amendments in this ASU permit an entity to apply the new guidance on either a prospective or a retrospective basis. The Company has not yet determined the impact of the adoption of this ASU on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting Topic 270. The amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270. The amendments in this Update result in a comprehensive list of interim disclosures that are required by GAAP. In developing the list of disclosures required by other Topics, the FASB focused on identifying the interim disclosures that are currently required under GAAP. The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in this Update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods. The amendments in this Update also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. The amendments in this Update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities. Early adoption is permitted. The amendments in this Update can be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements. The Company has not yet determined the additional information that it will be required to provide upon adoption of this ASU.
Factors That May Adversely Affect our Results of Operations
Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. This risk is amplified by our current need to secure additional capital. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, Medicare and Medicaid cost reimbursement, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, a resurgence of the COVID-19 pandemic and/or the emergence of new variants or new pandemics, cyber security risks and geopolitical instability. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business.
FOXO Technologies Inc. published this content on August 14, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 14, 2026 at 20:26 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]