0001437749-26-007961
SEC filingKingsway Financial Services Inc. reported a net loss attributable to common shareholders of $11.9 million for fiscal year 2025, compared to a net loss of $9.5 million in 2024. Total revenues increased 23.4% year-over-year to $135.0 million, driven by acquisitions in the Kingsway Search Xcelerator segment. However, total operating expenses grew 28.1% to $137.4 million, resulting in an operating loss of $2.4 million, a decline from an operating income of $2.2 million in the prior year. The company's financial position was strengthened by $32.7 million in net cash provided by financing activities, primarily from equity and debt issuances, which funded $29.6 million in net cash used for acquisitions and investments. Total assets increased to $231.5 million from $186.6 million, while total liabilities rose to $197.1 million from $168.3 million.
Kingsway Financial Services Inc. reported a challenging fiscal year 2025 with a net loss attributable to common shareholders of $11.9 million, widening from a $9.5 million loss in 2024. Total revenues increased significantly by 23.4% to $135.0 million, primarily driven by strategic acquisitions in the Kingsway Search Xcelerator segment. However, this revenue growth was offset by a 28.1% increase in total operating expenses to $137.4 million, resulting in an operating loss of $2.4 million compared to operating income of $2.2 million in the prior year. The company's loss from continuing operations before income tax benefit was $14.0 million, compared to $8.3 million in 2024. Basic and diluted loss per share attributable to common shareholders was $0.43, compared to $0.35 in the prior year.
Revenue growth was driven by the Kingsway Search Xcelerator segment, which increased 58.5% year-over-year to $64.2 million. This growth was primarily attributable to acquisitions completed during 2025, including Bud's Plumbing ($5.7 million revenue post-acquisition), Roundhouse ($9.7 million revenue post-acquisition), Advanced Plumbing ($2.9 million revenue post-acquisition), Southside Plumbing ($1.7 million revenue post-acquisition), and the full-year impact of Image Solutions acquired in September 2024. The Extended Warranty segment showed modest growth of 2.8% to $70.8 million, consisting of vehicle service agreement fees ($61.4 million), maintenance support service fees ($4.3 million), and warranty product commissions ($5.1 million). Service fee and other revenue represented the company's sole revenue stream.
The company's gross margin declined to 62.6% in 2025 from 65.5% in 2024, reflecting the impact of acquisitions with different cost structures. Operating margin turned negative at -1.8% compared to a positive 2.0% in the prior year. Cost of services sold increased 33.7% to $50.4 million, while general and administrative expenses grew 36.3% to $61.2 million. Claims authorized on vehicle service agreements increased 4.7% to $25.7 million. Other expenses, net totaled $11.6 million, including interest expense of $5.4 million, amortization of intangible assets of $8.2 million, and impairment of goodwill and intangible assets of $0.7 million, partially offset by net investment income of $1.6 million and net realized and unrealized investment gains of $0.7 million.
Net cash used in operating activities was minimal at -$3 thousand, compared to net cash provided by operating activities of $1.1 million in 2024. Net cash used in investing activities was $29.6 million, primarily for acquisitions of businesses ($29.2 million) and purchases of fixed maturities ($9.5 million), partially offset by proceeds from sales and maturities of fixed maturities ($10.6 million). Net cash provided by financing activities was $32.7 million, driven by proceeds from issuance of common stock ($15.6 million), proceeds from issuance of preferred stock ($8.0 million), and principal proceeds from debt ($26.3 million), partially offset by principal payments on debt ($15.2 million). Total assets increased 24.1% to $231.5 million, with goodwill ($69.1 million) and intangible assets ($52.3 million) representing significant portions. Total liabilities increased 17.1% to $197.1 million, with debt at $70.7 million and deferred service fees at $87.2 million.
The company's strategic focus remains on its Search Fund model to acquire and build businesses through its Kingsway Search Xcelerator and Extended Warranty segments. Management completed four acquisitions in 2025 (Bud's Plumbing, Roundhouse, Advanced Plumbing, and Southside Plumbing) and intends to maintain or potentially expand its three full-time Searchers as business opportunities permit. Key risk factors include outstanding recourse debt and acquisition financing of $70.7 million, exposure to interest rate increases, reliance on credit unions and dealers for Extended Warranty business, and competitive pressures in both segments. The company has U.S. net operating loss carryforwards of approximately $628.0 million as of December 31, 2025, which could provide future tax benefits if taxable income is generated.