Financial Analysis

Commitments and Contingencies Legal Proceedings From time to time the Company is or may become subject to various legal proceedings arising in the ordinary course of business, including proceedings involving members, other entities or regulatory bodies. Estimated liabilities are recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. At this time, the Company does not believe any such matters to be material individually or in the aggregate. These views are subject to change following the outcome of future events or the results of future developments.

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Stock-Based Compensation Stock-based compensation expense includes restricted stock units granted to employees and other service providers and has been reported in the Companys Consolidated Statements of Operations depending on the function performed by the employee or other service provider. Stock-based compensation expense recognized in each category of the Consolidated Statements of Operations was as follows (in thousands): Three Months Ended March 31, 2026 2025 Veterinary invoice expense $ 560 $ 770 Other cost of revenue 569 489 Technology and development 1,507 1,151 General and administrative 4,893 4,528 New pet acquisition expense 1,471 2,892 Total expensed stock-based compensation 9,000 9,830 Capitalized stock-based compensation 32 49 Total stock-based compensation $ 9,032 $ 9,879 Stock Options The following table presents information regarding stock options granted, exercised, and forfeited for the period presented: Number of Options Weighted Average Exercise Price per Share Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2025 197,232 $ 16.20 $ 4,175 Granted Exercised (27,233) 9.53 690 Forfeited (1,476) 9.36 Outstanding as of March 31, 2026 168,523 17.34 1,394 Exercisable as of March 31, 2026 168,523 $ 17.34 $ 1,394 As of March 31, 2026, stock options outstanding and stock options exercisable had a weighted average remaining contractual life of 1.0 year. The Company has not granted any new stock options since 2017 and all outstanding options ve …

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Fair Value Fair Value Disclosures The following table summarizes, by major security type, the Company's assets that are measured at fair value on a recurring basis, and placement within the fair value hierarchy (in thousands): As of March 31, 2026 Fair Value Level 1 Level 2 Level 3 Assets Money market funds $ 51,524 $ 51,524 $ $ Fixed maturities: Mortgage-backed securities and collateralized mortgage obligations 25,331 25,331 Other asset-backed securities 26,282 26,282 Corporate bonds 52,096 52,096 U.S. treasury securities 98,052 98,052 Total $ 253,285 $ 51,524 $ 201,761 $ As of December 31, 2025 Fair Value Level 1 Level 2 Level 3 Assets Money market funds $ 46,818 $ 46,818 $ $ Fixed maturities: Mortgage-backed securities and collateralized mortgage obligations 24,687 24,687 Other asset-backed securities 23,837 23,837 Corporate bonds 47,835 47,835 U.S. treasury securities 104,158 104,158 Total $ 247,335 $ 46,818 $ 200,517 $ The Company measures the fair value of money market funds, classified as Level 1, based on quoted prices in active markets for identical assets. The fair values of the Company's fixed maturity investments classified as Level 2 are based on either recent trades in inactive markets or quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. Held-to-maturity investments are carried at amortized cost and the fair value and changes in unrealized gains and losses are disclosed in Note 3, Inv …

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The effective tax rate for the quarter ended March31, 2026 was 18.1% compared to (2.7)% for the quarter ended March31, 2025, primarily due to the transfer of our Canadian insurance business to GPIC, resulting in an increase in taxable income in Canada …

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"Debt Prior Credit Facility On March 25, 2022, the Company entered into a credit agreement with Piper Sandler Finance, LLC, acting as the administrative agent, that provided the Company with $150.0 million in credit (the ""Prior Credit Facility""). The Prior Credit Facility obligated the Company to repay 0.25% of any then-outstanding Term Loans, together with accrued and unpaid interest, on a quarterly basis. In November 2025, the Company repaid the Prior Credit Facility in full utilizing proceeds from the PNC Facility. PNC Facility On November 4, 2025, the Company entered into a credit agreement with PNC Bank, National Association acting as the administrative agent, that provides the Company with $120.0 million in credit (the ""PNC Facility"") consisting of: (a) an initial term loan in an aggregate principal amount of $100.0 million (""PNC Initial Term Loan""), which was funded at closing; (b) commitments for revolving loans in an aggregate principal amount at any time outstanding not in excess of $20.0 million (PNC Revolving Loans), of which $15.0 million was drawn and the rest may be drawn at any time prior to maturity. The PNC Facility is secured by substantially all assets of the Company and its subsidiaries. Proceeds from the PNC Facility were utilized to pay off the Prior Credit Facility. The credit agreement with PNC Bank contains financial and other covenants. As of March 31, 2026, the Company was in compliance with all financial and other covenants. To the extent no …

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Segments The Company has two reporting segments: subscription business and other business. The subscription business segment generates revenue primarily from subscription payments related to the Company's direct-to-consumer products. The other business segment generates revenue from other product offerings, primarily by underwriting policies on behalf of third parties with whom the Company has a business-to-business relationship. The other business segment has, and targets, a lower margin profile than the Company's subscription business segment. The Company does not undertake marketing efforts for these policies and has a business-to-business relationship with these third-parties. The Company's chief operating decision maker is its Chief Executive Officer. The chief operating decision maker reviews revenue and operating income (loss) to evaluate segment performance. Revenue, veterinary invoice expense, other cost of revenue, and new pet acquisition expenses are generally directly attributed to each segment. Other operating expenses, such as technology and development expense, general and administrative expense, and depreciation and amortization, are generally allocated proportionately based on revenue in each segment. Interest and other expenses and income taxes are not allocated to the segments, nor included in the measure of segment profit or loss. The Company does not analyze discrete segment balance sheet information related to long-term assets. Substantially all of the C …

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Stockholders' Equity Common Stock and Preferred Stock As of March 31, 2026, the Company had 100,000,000 shares of common stock authorized and 43,620,614 shares of common stock outstanding. Holders of common stock are entitled to one vote on each matter properly submitted to the stockholders of the Company except those related to matters concerning possible outstanding preferred stock. At March 31, 2026, the Company had 10,000,000 shares of undesignated preferred stock authorized for future issuance and did not have any outstanding shares of preferred stock. The holders of common stock are also entitled to receive dividends as and when declared by the board of directors of the Company (the Board), whenever funds are legally available. These rights are subordinate to the dividend rights of holders of any senior classes of stock outstanding at the time. The Company does not intend to declare or pay any cash dividends in the foreseeable future. Share Repurchase Program In April 2021, the Board approved a share repurchase program, pursuant to which the Company may, between May 2021 and May 2026, repurchase outstanding shares of the Company's common stock. The Company repurchased no shares during the three months ended March 31, 2026 and 2025, respectively.

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