v3.25.4

Debt | 6 Months Ended
--- | ---
Dec. 31, 2025
Debt Disclosure [Abstract] |
Debt | DEBT Debt consisted of the following:
(in thousands) | December 31, 2025 |  | June 30, 2025
Revolving credit facility(1) | $ | 38,000 |  |  | $ | — |
Term Loans(1) | 304,355 |  |  | 314,000 |
Class A Notes | 44,021 |  |  | 50,054 |
Class B Notes | 29,348 |  |  | 33,369 |
Unamortized debt issuance costs and debt discount | (9,928) |  |  | (12,311) |
Total debt | 405,796 |  |  | 385,112 |
Less current portion of long-term debt: | (20,104) |  |  | (68,523) |
Long-term debt | $ | 385,692 |  |  | $ | 316,589 |
(1) As described below and in Note 17, “Subsequent Events,” the Company entered into a new credit agreement on January 8, 2026. The proceeds of the loans under the new credit agreement were used to repay in full all existing Term Loans (as defined below). Since the principal amounts due within one year from the balance sheet have been refinanced on a long-term basis after the balance sheet date but before the issuance of these financial statements, the Company has reclassified the current portion of the outstanding debt under the previous credit facility as of December 31, 2025. The combined aggregate amount of expected payments associated with the Notes and maturities associated with the Term Loans in existence as of December 31, 2025 are as follows:
(in thousands) |  | Remainder fiscal 2026 |  | 2027 |  | 2028 |  | 2029 |  |  |  |  |  | Total
Revolving credit facility |  | $ | — |  |  | $ | — |  |  | $ | 38,000 |  |  | $ | — |  |  |  |  |  |  | $ | 38,000 |
Term Loans(1) |  | 2,031 |  |  | 57,841 |  |  | 244,483 |  |  | — |  |  |  |  |  |  | 304,355 |
Class A Notes |  | 5,684 |  |  | 10,593 |  |  | 8,650 |  |  | 19,094 |  |  |  |  |  |  | 44,021 |
Class B Notes |  | 3,790 |  |  | 7,062 |  |  | 5,767 |  |  | 12,729 |  |  |  |  |  |  | 29,348 |
Total obligations |  | $ | 11,505 |  |  | $ | 75,496 |  |  | $ | 296,900 |  |  | $ | 31,823 |  |  |  |  |  |  | $ | 415,724 |
(1) The expected payments have been adjusted to reflect the classification of debt as of December 31, 2025. Significant changes in the Company’s debt during the six months ended December 31, 2025 were as follows: Senior Secured Credit Facility and Subsequent Refinancing On January 8, 2026 (the “Refinancing Date”), the Company refinanced all of its outstanding debt under the credit agreement, dated as of November 5, 2019, by and among the Company and Ares Capital Corporation, as administrative agent, UMB Bank, N.A., as lender and revolver agent, and the other lenders party thereto (as amended, the “Senior Secured Credit Facility”). As part of the refinancing, which is described further below in Note 17, “Subsequent Events,” the Company repaid all outstanding amounts under the Senior Secured Credit Facility, which was terminated on the Refinancing Date. Prior to the refinancing, the Senior Secured Credit Facility provided for a senior secured revolving credit facility (the “Revolving Credit Facility”) and a senior secured term loan, each with a maturity date of September 30, 2027. As of December 31, 2025, total proceeds from borrowings during the life of the term loan were $887.3 million (the “Term Loans”), and available borrowings under the Revolving Credit Facility were $33.7 million. Quarterly principal payments were 0.625% of the principal balance as of the date of the eleventh amendment with the remaining balance due on the maturity date. Prior to the refinancing, the Term Loans bore interest on the outstanding principal amount thereof at a rate per annum equal to the sum of (a) cash interest in the amount of either, at the Company’s option, (i) SOFR (subject to a floor of 3.00%) plus 6.50% or (ii) a base rate plus 5.50%, and (b) payable in kind interest ranging from 0.00% to 3.00% determined based on the asset coverage ratio as of the end of the applicable test period. As of December 31, 2025, the Company’s payable in kind interest rate was 0.00%. The effective interest rate for the Term Loans as of December 31, 2025 was 10.3%. The Revolving Credit Facility accrued interest on amounts drawn at a rate per annum equal to either, at the Company’s option, (a) SOFR (subject to a floor of 1.0%) plus 5.0% or (b) a base rate plus 4.0%. The effective interest rate for the Revolving Credit Facility as of December 31, 2025 was 8.92%. As of December 31, 2025, the Company was in compliance with all financial covenants pursuant to its debt obligations. Securitization and Indenture On October 15, 2024, the Company and certain of its subsidiaries, including SQ ABS Issuer, LLC (the “Issuer”), a special purpose entity and wholly-owned subsidiary of the Company, entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with the purchasers party thereto (the “Purchasers”). Pursuant to the Note Purchase Agreement, the Issuer issued $60.0 million of senior secured 7.80% Class A Notes and $40.0 million of senior secured 9.65% Class B Notes (together the “Notes”) to the Purchasers. The Notes are governed by an Indenture, dated as of October 15, 2024, with UMB Bank, N.A. as indenture trustee (the “Indenture”). The Notes have a final legal maturity of October 20, 2039 and an anticipated repayment date of September 20, 2028. The Company used the proceeds obtained from the issuance of the Notes to repay a portion of its outstanding Term Loans in conjunction with the Eleventh Amendment. The Notes are secured by a specified pool of renewal commissions that include both accounts receivable for policy renewals as well as commissions receivable for estimated future policy renewals (collectively, the “Subject Renewal Commissions”). The Subject Renewal Commissions are associated with underlying Medicare Advantage policies effective prior to January 1, 2024 and active as of August 31, 2024. As of December 31, 2025, there were $42.5 million of Subject Renewal Commissions included on the condensed consolidated balance sheets. Under the terms of the Indenture, the Company services the transferred Subject Renewal Commissions, and the related collections are remitted to a segregated bank account. The funds in the segregated account are used only to fund payments related to the Indenture and is considered restricted cash. The Company’s restricted cash balance totaled $5.0 million as of December 31, 2025, of which $3.9 million was included within cash, cash equivalents, and restricted cash and $1.1 million was classified as long-term and included within other assets on the Company’s condensed consolidated balance sheets. The Notes contain covenants that, among other things, limit the ability of the Issuer to: (i) sell, transfer, or dispose of assets without the consent of a majority of the noteholders, (ii) create or permit liens on its assets (other than certain permitted liens) and (iii) incur indebtedness (other than permitted indebtedness). The Notes issued in connection with the Indenture bear interest on the unpaid principal amount at 7.80% and 9.65% for Class A and Class B Notes, respectively. The Notes amortize based on a target loan-to-value calculation, and if any Notes remain outstanding after September 2028, then all available funds of the Issuer will be swept to pay down the Notes. After September 2028 and October 2030, interest will increase an additional 2.00% and 4.00% per annum, respectively, on any Notes outstanding. The effective interest rate for the Class A and Class B Notes as of December 31, 2025 was 9.11% and 11.02%, respectively. As the Indenture was entered into in conjunction with the Eleventh Amendment, the Company performed an analysis under ASC 470, Debt, and determined that debt modification accounting was appropriate for the Term Loans and Notes. The additional debt discount costs incurred in connection with the Eleventh Amendment and Indenture include the fair value of the Eleventh Amendment Warrants, fees paid on behalf of lenders, and original issue discount on the Notes. The Company incurred a total of $3.7 million in debt issuance costs and $2.7 million in debt discount related to the Indenture, of which none of the debt issuance costs were capitalized and $2.7 million in debt discount were deferred. The Company incurred a total of $59.1 million in debt issuance costs and debt discounts related to the Senior Secured Credit Facility and Notes, of which $35.3 million in debt issuance costs were capitalized and $11.9 million in debt discounts were deferred. The costs associated with the Term Loans and Notes are being amortized using the effective interest method over the term of the respective debt instruments. The costs associated with the Revolving Credit Facility are being amortized on a straight-line basis over the remaining term of the Senior Secured Credit Facility. The amortization of debt issuance costs associated with the Company’s debt is included in interest expense, net in the Company’s condensed consolidated statements of comprehensive income. During the six months ended December 31, 2025, the Company repaid $10.1 million of the outstanding balance on the Notes. The carrying amounts of the Company’s Term Loans and Notes approximate fair value, as the Term Loans bear variable interest rates that reset based on market indices and the Notes were issued at prevailing market terms with no significant changes in the Company’s credit quality, interest rates, or credit spreads since issuance. Variable Interest Entity The Issuer was formed on July 24, 2023 as a bankruptcy remote and separate legal entity with its own creditors who will be entitled, prior to and upon the liquidation of the Issuer, to be satisfied out of the Issuer’s assets prior to any assets becoming available to the Company. Accordingly, the assets of the Issuer are not available to pay creditors of the Company or any of its subsidiaries. The Issuer, as described above, meets the definition of a variable interest entity (“VIE”) for which the Company is the primary beneficiary because it has the power over the significant activities of the VIE in its capacity as the servicer of the Subject Renewal Commissions. As such, the Issuer’s assets, liabilities, and financial results of operations are consolidated in the Company’s condensed consolidated financial statements. As of December 31, 2025, the Issuer’s liabilities included in the condensed consolidated balance sheets primarily consisted of the borrowings under the Indenture of $73.4 million.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 8A -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-8A Reference 2: http://www.xbrl.org/2003/role/disclosureRef 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