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10-Q Abacus Settlements LLC - SEGMENT REPORTING
 3 Months Ended
Mar. 31, 2024
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
SEGMENT REPORTING SEGMENT REPORTING
Segment Information—The Business Combination that took place on June 30, 2023, where ERES, LMA and Abacus Settlements consummated the combining of the Companies, triggered a re-organization of Abacus Life
Inc., where the legacy Abacus Settlements business and legacy LMA business would both operate under Abacus Life, Inc. subsequent to the Business Combination date. Abacus Settlements historically had one operating and reportable segment, Originations. LMA historically had two operating and reportable segments, (1) Portfolio Servicing and (2) Active Management. As the Business Combination did not occur until the last day of the second quarter of 2023, income activity related to Abacus Settlements had not yet been reported by Abacus Life, Inc. as the businesses did not begin operating as a combined Company until July 1, 2023. As such, beginning in the third quarter of 2023, the Company organizes its business into three reportable segments (1) Portfolio Servicing, (2) Active Management, and (3) Originations, which all generate revenue and incur expenses in different manners.
This segment structure reflects the financial information and reports used by the Company’s management, specifically its chief operating decision maker (CODM), to make decisions regarding the Company’s business, including resource allocations and performance assessments, as well as the current operating focus in compliance with ASC 280, Segment Reporting. The Company’s CODM is the President and Chief Executive Officer. The Company’s reportable segments are not aggregated.
The Portfolio Servicing segment generates revenues by providing policy services to customers on a contract basis.
The Active Management segment generates revenues by buying, selling, and trading policies and maintaining policies until receipt of death benefits.
The Originations segment generates revenue by originating life insurance policy settlements between investors or buyers, and the sellers, who are often the original policy owner. The policies are purchased from owners or other providers through advisors, brokers or directly through the owner.
The Company’s method for measuring profitability on a reportable segment basis is gross profit. The CODM does not review disaggregated assets by segment. The Company adopted ASU 2023-07 in March 2024. The most significant provision was for the Company to disclose significant segment expenses that are regularly provided to the CODM. The Company’s CODM periodically reviews cost of revenues by segment and treats it as a significant segment expense.
Revenue related to the Company’s reporting segments is as follows:
Three Months Ended March 31,
20242023
Portfolio servicing$217,935 $302,871 
Active management19,796,999 9,970,518 
Originations 5,024,204 — 
Segment revenue (including inter-segment)25,039,138 10,273,389 
Intersegment elimination(3,551,954)— 
Total revenue$21,487,184 $10,273,389 
Cost of revenue related to the Company’s reporting segments is as follows:
Three Months Ended March 31,
20242023
Portfolio servicing$362,392 $325,114 
Active management (including stock-compensation)958,472 164,436 
Originations4,951,987 — 
Total expenses (including inter-segment)6,272,851 489,550 
Intersegment elimination(3,551,954)— 
Total cost of revenue$2,720,897 $489,550 
Information related to the Company’s reporting segments for the three-month ended March 31, 2024 and 2023 is as follows:
Three Months Ended March 31,
20242023
Portfolio servicing$(144,457)$(22,243)
Active management18,838,527 9,806,082 
Originations72,217 — 
Total gross profit18,766,287 9,783,839 
Sales and marketing(1,929,944)(729,004)
General and administrative (including stock-based compensation)(11,353,499)(696,892)
Depreciation and amortization expense(1,682,054)(1,043)
Other (expense) income(53,028)(210,432)
Loss on change in fair value of warrant liability 946,960 — 
Interest expense(3,670,445)(357,383)
Interest income421,426 7,457 
Gain (Loss) on change in fair value of debt(2,712,627)(953,433)
Unrealized (loss) gain on investments1,164,966 125,220 
Provision for income taxes(1,173,513)656,467 
Net income (loss) attributable to non-controlling interests(73,274)460,707 
Net income attributable to common stockholders$(1,348,745)$8,085,503 
Segment gross profit is defined as revenues less cost of sales, excluding depreciation and amortization. Expenses below the gross profit line are not allocated across operating segments, as they relate primarily to the overall management of the consolidated entity.
As of March 31, 2024 and March 31, 2023, our operations are confined to the United States.
SEGMENT REPORTING
Segment Information—The Business Combination that took place on June 30, 2023, where ERES, LMA and Abacus Settlements consummated the combining of the Companies, triggered a re-organization of Abacus Life Inc., where the legacy Abacus Settlements business and legacy LMA business would both operate under Abacus Life, Inc. subsequent to the Business Combination date. Abacus Settlement’s historically had one operating segment one reportable segment, Originations. LMA historically had two operating segments, (1) Portfolio Servicing and (2) Active Management. As the Business Combination did not occur until the last day of the second quarter, income activity related to Abacus Settlements had not yet been reported by Abacus Life, Inc. as the businesses did not begin operating as a combined Company until July 1, 2023. As such, beginning in the third quarter, the Company now organizes its business into three reportable segments (1) Portfolio Servicing, (2) Active Management and (3) Originations, which all generate revenue and incur expenses in different manners.
This segment structure reflects the financial information and reports used by the Company’s management, specifically its chief operating decision maker (CODM), to make decisions regarding the Company’s business, including resource allocations and performance assessments, as well as the current operating focus in compliance with ASC 280, Segment Reporting. The Company’s CODM is the President and Chief Executive Officer. The Company’s reportable segments are not aggregated.
The Portfolio Servicing segment generates revenues by providing policy services to customers on a contract basis.
The Active Management segment generates revenues by buying, selling, and trading policies and maintaining policies until receipt of death benefits.
The Originations segment generates revenue by originating life insurance policy settlements between investors or buyers, and the sellers, who is often the original policy owner. The policies are purchased from owners or other providers through advisors, brokers or directly through the owner.
The Company’s method for measuring profitability on a reportable segment basis is gross profit. The CODM does not review disaggregated assets by segment.
Revenue related to the Company’s reporting segments is as follows:
Years Ended December 31,
20232022
Portfolio servicing$1,002,174 $1,470,972 
Active management61,195,377 43,242,580 
Originations 19,247,972 — 
Segment revenue (including inter-segment)81,445,523 44,713,552 
    Intersegment elimination(15,044,072)— 
Total revenue$66,401,451 $44,713,552 
Information related to the Company’s reporting segments for the years ended December 31, 2023 and 2022 is as follows:
Years Ended December 31,
20232022
Portfolio servicing$278,115 $300,235 
Active management59,020,991 38,528,648 
Originations611,968 — 
Total gross profit59,911,074 38,828,883 
Sales and marketing(4,905,747)(2,596,140)
General, administrative and other (including stock-based compensation)(26,482,571)(1,426,865)
Depreciation and amortization expense(3,409,928)(4,282)
Other (expense) income(146,443)(347,013)
Loss on change in fair value of warrant liability (4,204,360)— 
Interest expense(9,866,821)(42,798)
Interest income594,764 1,474 
Gain (Loss) on change in fair value of debt(2,356,058)(90,719)
Unrealized (loss) gain on investments1,369,112 (1,045,623)
Provision for income taxes(1,468,535)(889,943)
Less: Net gain (loss) attributable to non-controlling interests482,139 (704,699)
Net income attributable to Abacus Life, Inc.$9,516,626 $31,682,275 
Segment gross profit is defined as revenues less cost of revenue, excluding depreciation and amortization. Expenses below the gross profit line are not allocated across operating segments, as they relate primarily to the overall management of the consolidated entity.
As of December 31, 2023 and 2022, our operations are confined to the United States.
Abacus Settlements, LLC  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
SEGMENT REPORTING SEGMENT REPORTING
Operating as a centrally led life insurance policy intermediary, Abacus’ president and chief executive officer is the chief operating decision maker who allocates resources and assesses financial performance based on financial information presented for Abacus as a whole. As a result of this management approach, Abacus is organized as a single operating segment.
SEGMENT REPORTING
Operating as a centrally led life insurance policy intermediary, Abacus’ president and chief executive officer is the chief operating decision maker who allocates resources and assesses financial performance based on financial information presented for Abacus as a whole. As a result of this management approach, Abacus is organized as a single operating segment.