CBZ 10-K & 10-Q changes, risk factors and insider trading

Payments on accounts receivable may be slower than expected, or amounts due on receivables or notes may not be fully collectible. Professional services firms often experience higher average accounts receivable days outstanding compared to many other industries, which may be magnified if the general economy worsens. If our collections become slower, our liquidity may be adversely impacted. We monitor the aging of receivables regularly and make assessments of the ability of customers to pay amounts due. We provide for potential bad debts and recognize additional reserves against bad debts as we deem it appropriate. Notwithstanding these measures, our customers may face unexpected circumstances that adversely impact their ability to pay their trade receivables or note obligations to us, and we may face unexpected losses as a result.

Our business could be adversely affected if the non-attest business assets we acquired, or the attest assets CBIZ CPAs acquired, from Marcum doesdo not perform to our expectations or we underestimate the liabilities we are assuming. Even if we successfully integrate the non-attest business assets we acquired from Marcum and CBIZ CPAs successfully integrates the attest business assets it acquired from Marcum, there can be no assurance we will realize the anticipated benefits of the Transaction. While our management and advisors have spent significant time and resources evaluating Marcum’s business, it is difficult to predict future performance and the benefits from a transaction involving large and complex organizations. In addition, we assumed Marcum’s liabilities other than specified excluded liabilities that were not contributed by Marcum to Marcum Advisory Group ("MAG") prior to closing of the Transaction. It is possible that we may have underestimated the liabilities that we assumed, or we may have assumed liabilities that are unknown or that we did not foresee and were not excluded from Marcum’s contribution to Marcum Advisory Group ("MAG").MAG. If the liabilities that we assumed are more than we anticipate, or insurance coverage is not available to us in sufficient amounts to cover the liabilities that we assumed, it could increase the effective cost of the Transaction and adversely impact our financial condition and results of operations. The performance and benefits that we ultimately achieve may be influenced by a variety of factors, many of which are outside of our control. If we do not achieve the anticipated benefits of the Transaction, at all or in the expected timeframe, or become responsible for costs or liabilities that we did not foresee, our business could be adversely affected.

As a condition to close the Transaction, CBIZ CPAs, a CPA firm with which we maintain an ASA, completed the Attest Purchase, which consisted of purchasingpurchased from Marcum substantially all of Marcum's attest business assets, subject to certain exclusions.exclusions We(the expect"Attest thePurchase"). The Attest Purchase will significantly increaseincreased the attest services received and the revenues generated under our existing ASA with CBIZ CPAs.

Under the ASA with CBIZ CPAs and our other ASAs, we provide a range of services to the CPA firms, including: functions such as professional staff, office management, bookkeeping, and accounting; preparing marketing and promotion materials; and providing office space, computer equipment, systems support and administrative support. Services are performed in exchange for a fee. Fees earned by us under the ASAs are recorded as revenue in our Consolidated Statements of Comprehensive Income. In the event that accounts receivable and unbilled work in process become uncollectible by the CPA firms, the service fee due to us is typically reduced on a proportional basis.

With respect to CPA firm clients that are required to file audited financial statements with the SEC, the SEC staff has informed us that, under Regulation S-X, it considers CBIZ to be an "associated entity" of the CPA firms with which CBIZ has contractual relationships. Accordingly, we do not hold any financial interest in, nor do we enter into any business relationship with, an SEC-reporting attest client that the CPA firm performing an audit could not maintain. Further, we do not provide any non-audit services to an SEC-reporting attest client that the CPA firm performing an audit could not provide under the auditor independence restrictions set out in the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"),Act, and other rules and requirements of the SEC and the Public Company Accounting Oversight Board (“PCAOB”). As a result, the acquisition and integration of Marcum's attest business assets into CBIZ CPAs and Marcum's non-attest business assets into CBIZ will resultresulted in conflicts and independence impairments that will likely requirerequired certain services to be terminated and resultresulted in a loss of revenue. Although we conducted due diligence on conflictsrevenue, and independencefuture issues in connection with the Transaction, it is possible that the conflicts and independence issues, and resulting potential loss of revenue,acquisitions could behave morea significantsimilar than anticipated.effect. Applicable professional standards generally permit us to provide additional services to privately-held companies, in addition to those services that may be provided to SEC-reporting attest clients of a CPA firm. We and the CPA firms have implemented policies and procedures designed to enable us to maintain independence and freedom from conflicts of interest in accordance with applicable standards. In the past, given the pre-existing limits set by usCBIZ CPAs on ourits relationships with SEC-reporting attest clients of the CPA firms, and the limited number and size of such clients, the imposition of independence restrictions under Sarbanes-Oxley,the Sarbanes-Oxley Act, SEC rules and interpretation, and PCAOB standards did not materially affect our revenues. Following the Attest Purchase, thereThere has been a significant increase in the number of SEC-reporting attest clients of CBIZ CPAsCPAs. (fromCBIZ veryCPAs’ fewis ornow none in recent periodssubject to wellannual overinspection 100by the PCAOB. In addition, its system of quality control could be subject to additional regulatory scrutiny following the AttestTransaction Purchase). Asas a result,result itof the previously settled PCAOB and SEC sanctions against Marcum related to quality control failures and violations of audit standards in connection with its prior audit work. It may be more challenging to manage conflicts of interest and independence restrictions and these challenges could adversely impact our revenues and results of operations. The SEC staff has further informed us that independence rules that apply to clients that receive attest services under SEC and PCAOB standards from such CPA firms would prohibit such clients from holding any shares of our common stock.

There can be no assurance that following the policies and procedures implemented by us and the CPA firms will enable us and the CPA firms to avoid circumstances that would cause us and them to lack independence from an SEC-reporting attest client; nor can there be any assurance that state, United States Government Accountability Office or United States Department of Labor accountancy authorities or other accountancy authorities will not impose additional restrictions on the profession. To the extent that the CPA firms for whom we provide staffing, administrative and other services are affected, we may experience a decline in fee revenue from these businesses as well as expenses related to addressing independence concerns. ToPrior date,to the Attest Purchase, revenues derived from providing services in connection with attestation engagements of the attest firms performed for SEC-reporting clients have not been material, but we expecthowever, they will significantly increaseincreased as a result of the Attest Purchase.

We may fail to realize the anticipated benefits of acquisitions, or they may prove disruptive and could result in the combined business failing to meet our expectations. The success of our acquisitions, including the success of our recent acquisition of Marcum pursuant to the Transaction,acquisitions will depend, in part, on our ability to successfully integrate acquired businesses with current operations. If we are not able to successfully achieve this objective, the anticipated benefits of any acquisition may not be realized fully or at all or may take longer or cost more to realize than expected. The process of integrating operations may require a disproportionate amount of resources and management attention. Our management team may encounter unforeseen difficulties in managing integrations.

We may not be able to acquire and finance additional businesses, which could limit our ability to pursue our business strategy. We acquired fiveone businessesbusiness during 2024, including Marcum.2025. Strategic acquisitions are part of our overall business growth strategy, and it is our intention to selectively acquire businesses or client lists over time that are complementary to existing service offerings in our target markets and/or new and attractive markets. However, we cannot be certain that we will be able to continue identifying appropriate acquisition candidates and acquire them on satisfactory terms, and we cannot be assured that such acquisitions, even if completed, will perform as expected or will contribute significant synergies, revenues or profits. In addition, we may face increased competition for acquisition opportunities, which may inhibit our ability to complete transactions on terms that are favorable to us. As discussed below, there are certain provisions under the 2024 Credit Facilities (as defined below) that may limit our ability to acquire additional businesses. In the event that we are not in compliance with certain covenants as specified in the 2024 Credit Facilities, we could be restricted from making acquisitions, restricted from borrowing funds from the Term Loan and Revolving Credit Facility (as defined below) for other uses, or required to pay down the outstanding balance on the line of credit. To the extent we are unable to find suitable acquisition candidates or finance the acquisition of such candidates, an important component of our growth strategy may not be realized.

We will incur transaction, integration, and restructuring costs in connection with our acquisition program. We have incurred and will continue to incur significant costs in connection with our acquisition program, including fees of our attorneys, accountants, and financial advisors. If acquisitions are consummated, we expect to incur additional costs associated with transaction fees and other costs related to the acquisitions. IfWhether or not such acquisitions are not consummated, suchthe related costs may adversely affect our revenues and ability to achieve operational, financial and strategic objectives.

Changes in the United States healthcare environment, including new healthcare legislation, may adversely affect the revenue and margins in our healthcare benefit businesses. Our employee benefits business, specifically our group health consulting and brokerage businesses, receives commissions for brokering employer-sponsored healthcare policies with insurance carriers on behalf of the client. In many cases, these commissions consist of a ratable portion of the insurance premiums on those policies, based upon a sliding scale pertaining to the dollar volumevalue of premiums and/or the number of participants in the plan.

Changes in the healthcare environment, including any legislated changes in the United States’ national healthcare system, that affect the methods by which insurance carriers remunerate brokers, could adversely impact our revenues and margins in this business. Specifically, legislation or other changes could afford our clients and their employees the ability to seek insurance coverage through other means of direct access with insurance carriers or other similar avenues, which could eliminate or adversely alter the remuneration brokers receive from insurance carriers for their services. Furthermore, statutory or regulatory changes may result in establishing alternatives to employer-sponsored healthcare insurance or replace it with government-sponsored health insurance programs. These changes could materially alter the healthcare industry in the United States and our ability to provide effective services in these areas may be substantially limited and adversely affect revenue and margins in our healthcare benefit business.

We are subject to risks relating to processing customer transactions for our payroll and other transaction processing businesses. The high volume of client funds and data processed by us, or by our out-sourced resources abroad, in our transaction related businesses entails risks for which we may be held liable if the accuracy or timeliness of the transactions processed is not correct. In addition, related to our payroll and employee benefits businesses, we store personal information about some of our clients and their employees for which we may be liable under the Health Insurance Portability and Accountability Act or other governmental regulations if the security of this information is breached. In the past, our third-party service providers hadhave experienced data breaches that allowed unauthorized third-parties to gain access to the Company’s and its clients’ data, including personally identifiable information. While thissuch breachbreaches didhave not subjectsubjected the companyCompany to liability under the Health Insurance Portability and Accountability Act or other governmental regulations, there can be no assurance that in the event of a future breach, we will not be liable under those governmental regulations. We could incur significant legal expense to defend any claims against us, even those claims that we believe are without merit and against which we believe we have substantial defenses. While we carry insurance against these potential liabilities, we cannot be certain that circumstances surrounding such an error or breach of security would be entirely reimbursed through insurance coverage. We make risk-based decisions on the measures to implement, and we believe we have appropriate controls and procedures in place to address our fiduciary responsibility and mitigate these risks. However, if we are not successful in managing these risks, our business, financial condition, and results of operations may could be harmed in the future.

We are subject to risk as it relates to software that we license from third parties. We license software from third parties, much of which is integral to our systems and our business. The licenses are generally terminable if we breach our obligations under the license agreements. If any of these relationships were terminated or if any of these parties were to cease doing business or cease to support the applications we currently utilize, we may be forced to spend significant time and moneyresources to replace the licensed software. However, we cannot assure you that the necessary replacements will be available on reasonable terms,terms or on a reasonable timeline, if at all.

Given our levels of share-based compensation, our tax rate may vary significantly depending on our stock price. We apply FASB ASC Topic 718, Compensation - Stock Compensation under which the tax effects of the accounting for share-based compensation may significantly impact our effective tax rate from period to period. In future periods in which our stock price is higher than the grant date fair value of the share-based compensation vesting or exercises in that period, we will recognize excess tax benefits that will decrease our effective tax rate. In future periods in which our stock price is lower than the grant price of the share-based compensation vesting in that period, our effective tax rate may increase. The amount and value of share-based compensation issued relative to our earnings in a particular period will also affect the magnitude of the impact of share-based compensation on our effective tax rate. These tax effects are dependent on our stock price and exercise activity, which we do not control, and a decline in our stock price could significantly increase our effective tax rate and adversely affect our results of operations.

We require a significant amount of cash for interest payments on our debt and to expand our business as planned. As of December 31, 2024,2025, our debt consisted primarily of $1.4$1,472.4 billionmillion in principal amount outstanding under our amendedAmended and restatedRestated creditCredit agreementAgreement, by and among CBIZ Operations, Inc., as the Borrower, the Company, the several banks, financial institutions, institutional lenders and other investors from time to time party thereto as the Lenders, and Bank of America, N.A., as Agent, as Issuing Bank and as Swing Line Bank (as amended by that certain First Amendment, dated as of March 7, 2025 and as further amended by that certain Second Amendment, dated as of April 29, 2025, the "2024 Credit Facilities") providing for $2.0$2,000.0 billionmillion in senior secured credit facilities, consisting of a $1.4$1,400.0 billionmillion term loan (the "Term Loan") and $600.0 million revolving credit facility (the "Revolving Credit Facility"). Our debt requires us to dedicate a portion of our cash flow from operations to pay interest on our indebtedness, thereby reducing the funds available to use for acquisitions, capital expenditures and general corporate purposes. Our ability to make interest payments on our debt, and to fund acquisitions, will depend upon our ability to generate cash in the future. Insufficient cash flow could place us at risk of default under our debt agreements or could prevent us from expanding our business as planned. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us under the 2024 Credit Facilities in an amount sufficient to enable us to fund our other liquidity needs. Volatility in interest rates from monetary policy or economic conditions could increase interest expense, cause uncertainty and impact our ability to pay interest on our indebtedness. Refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, for further information regarding interest rate risk.

Terms of the 2024 Credit Facilities could adversely affect our ability to run our business and/or reduce stockholder returns. The terms of the 2024 Credit Facilities could impair our ability to operate our business effectively and may limit our ability to take advantage of business opportunities. For example, the 2024 Credit Facilities contain covenants that could (i) restrict our ability to repurchase or redeem our capital stock or debt, or merge or consolidate with another entity; (ii) limit our ability to borrow additional funds or to obtain other financing in the future for working capital, capital expenditures, acquisitions, investments and general corporate purposes; (iii) limit our ability to dispose of our assets, to create liens on our assets, to extend credit or to issue dividends to our stockholders; and/or (iv) make us more vulnerable to economic downturns and reduce our flexibility in responding to changing business and economic conditions.

Our failure to satisfy covenants in our debt instruments could cause a default under those instruments. Our debt instruments include a number of covenants relating to financial ratios and tests. Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any of these covenants could result in a default under these instruments. An event of default would permit our lenders and other debt holders toto, among other things, declare all amounts borrowed from them to be due and payable, together with accrued and unpaid interest. If the lenders accelerate the repayment of borrowings, we may not have sufficient assets to repay our debt.

The significant number of shares issuable as the stock consideration in the Transaction may adversely impact our stock price.Thereprice. There can be no assurance the Transaction will be accretive to earnings per share, at all or in expected timeframes. If we do not perform as expected following the Transaction or costs or assumed liabilities are greater than anticipated, our earnings per share could be adversely impacted by the significant increase in outstanding shares. In addition, although restrictions on resale under applicable securities laws prevent sales in at least the six months following closing, after that time, Marcum partners are notno longer subject to contractual limitations on their ability to resell shares once they receivereceived them.upon the closing of the Transaction. Additionally, pursuant to the terms of the Transaction, CBIZ is obligated to deliver shares to the Marcum partners each month for 36 months following January 2, 2025. While the delivery of the stock consideration in installments over approximately four years may mitigate the potential for sales of a large volume at any particular time, persistent selling, or the perception of persistent selling, could adversely impact the market price of our common stock.

The future issuance of additional shares could adversely affect the price of our common stock. Future sales or issuances of common stock, including those related to the usesTransaction described below, or the perception that sales could occur, could adversely affect the market price of our common stock and dilute the percentage ownership held by our stockholders. We have authorized 250.0 million shares of common stock, and have approximately 53.354.7 million shares of common stock outstanding at January 31, 2025.2026. A substantial number of these shares have been issued in connection with acquisitions, including the Transaction. As part of many acquisitions, shares are contractually restricted from sale for a one-year period, and as of January 31, 2025,2026, approximately 3.363 millionthousand shares of our common stock were under lock-up contractual restrictions that expire by December 31, 2025.2026. We cannot be sure when sales by holders of our stock will occur, how many shares will be sold or the effect that sales may have on the market price of our common stock.

Furthermore, once fully issued, the future stock consideration issuable infrom the Transaction is expected to constitute approximately 22%12%, as of December 31, 2025, of our outstanding shares of common stock, without giving effect to any subsequent issuances, repurchases or other changes in the number of shares outstanding. As a result, our current stockholders will own a meaningfully smaller percentage of the Company than they currently own, and collectively will have less ability to influence the Company’s management and policies. In addition, to the extent that Marcum partners retain a significant portion of the shares that are issued to them, they will collectively have significant influence on any matters requiring a vote of stockholders.

The price of our common stock could be adversely impacted if we do not perform to expectations following the Transaction.TheTransaction. The market price of our common stock could be adversely affected if we do not perform to our own and investor expectations. We are a larger and more complex organization following the closing of the Transaction, and in order to maintain and earn the trust of our investors, we will have to effectively execute on our strategy to integrate Marcum and achieve the anticipated benefits and synergies of the Transaction. This process will take time, and it will be necessary to effectively communicate our progress and strategy to investors over the short and long term.investors. If we experience challenges or delays in this process, it could adversely impact, or cause volatility in, our operating results. It could also result in a decrease in investor confidence and have an adverse impact to the market price of our common stock or cause increased volatility in trading prices.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to, and should be read in conjunction with, our consolidated financial statements included elsewhere in this report. In addition to historical information, this discussion and analysis containscontain forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management’s expectations. Please see the sections of this report entitled “Forward-Looking Statements” and “Risk Factors.” This section generally discusses the results of operations for fiscal year 20242025 compared to fiscal year 2023.2024. For discussion related to the results of operations and changes in financial conditions for fiscal year 20232024 compared to fiscal year 20222023 refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 20232024 as filed with the SEC on February 23,28, 2024.2025.

Financial Year in Review - Revenue of $1,813.5$2,758.0 million in 20242025 grew $222.3$944.5 million, or 14.0%,52.1%, from revenue of $1,591.2$1,813.5 million in 2023.2024. Same-unitRevenue revenue,from asnewly definedacquired below in the "Results of Operations" section, increased by $76.9 million, or 4.8%, while acquisitions,operations, net of divestitures, contributed $145.4$914.2 millionmillion, or 50.4%, of incremental revenue for the year ended December 31, 2025, as compared to revenue,the orsame 8.0%.period in 2024. A detailed discussion of revenue by practice group is included under “Operating Practice Groups.” Net income in 20242025 decreasedincreased $80.0$74.4 million, or 66.1%,181.3%, to $115.4 million from $41.0 million from $121.0 million in 2023.2024. Refer to “Results of Operations” for a detailed discussion of the components of net income. Earnings per diluted share was $1.83 in 2025, compared to $0.78 in 2024, compared to $2.39 in 2023, with a fully diluted weighted average share count of 63.2 million shares in 2025, compared to 52.7 million shares in 2024, compared to 50.6 million shares in 2023.2024.

Strategic Use of Capital - Our overall business objective continuesis tofunding focusorganic ongrowth makingacceleration strategicand acquisitionsmeeting working capital needs. This includes investments in client service delivery and emerging technology that allowsupport usrevenue togrowth strengthenand improve operational excellence. Following the completion of the Transaction, our presence in existing markets, expand into high growth industries, and broaden our services to our existing offerings. To achieve our business objective of making strategic acquisitions, our currentsecond priority for use of capital is to maximize cash flow to pay down debt, which will allow us more liquiditydebt to makebe strategicwithin acquisitionsa innet leverage ratio range of 2.0x and 2.5x overtime. As a result of the future.Transaction and related 2024 Credit Facilities, we have $1,472.4 million of outstanding debt under the 2024 Credit Facilities as of December 31, 2025. In addition, we believe that repurchasing shares of our common stock can be a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders. We will also remain focused on making strategic acquisitions that allow us to strengthen our presence in existing markets, expand into high growth industries, and broaden our services to our clients.

PursuantUnder tothe previouslyShare authorizedRepurchase share repurchase programs,Program, we repurchased 1.31.5 million shares of our common stock for a total cost of $109.1 million under the ROFR Agreement and 0.9 million shares of our common stock in the open market atduring the year ended December 31, 2025 for a total cost of approximately$50.9 $65.1 million in 2023.million. We didrepurchased not repurchase anyno shares of our common stock inon the open market induring the year ended December 31, 2024. Shares repurchased to settle statutory employee withholding related to vesting of stock awards were 0.1 million shares at a cost of $7.8 million during the year ended December 31, 2025 and 0.2 million shares at a cost of $11.5 million during the year ended December 31, 2024. Refer to Note 14, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program.

We provide professional business services that help clients manage their finances and employees. We deliver our integrated services through the following three practice groups: Financial Services, Benefits and Insurance Services and National Practices. A description of these groups’ operating results and factors affecting their businesses is provided below.below under "Operating Practice Groups."

Non-qualified Deferred Compensation Plan - We sponsor a non-qualified deferred compensation plan ("NQDCP"), under which aselect CBIZ employee’semployees compensation deferral is held in a rabbi trust and invested accordingly as directed by the employee. Income and expenses related to the deferred compensation plan are included in “Operating expenses,” “Gross margin” and “Corporate General & Administrative expenses” and are directly offset by deferred compensation gains or losses in “Other income (expense), net” in the accompanying Consolidated Statements of Comprehensive Income. The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share.

Our operating expenses increased by $263.0$771.6 million. Operating expense as a percentage of revenue increaseddecreased to 89.9%87.1% of revenue in 20242025 as compared to 86.0%89.9% of revenue for the prior year. The non-qualified deferred compensation plan increased operating expenses by $20.3 million in 2025 and by $18.8 million in 2024 and by $17.2 million in 2023.2024. Excluding the impact of the non-qualified deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $2,382.3 million, or 86.4% of revenue, in 2025 as compared to $1,612.2 million, or 88.9% of revenue, in 2024 as compared to $1,350.8 million, or 84.9% of revenue, in 2023.2024.

The majority of our operating expenses relate to personnel costs, which includesinclude (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation and (iv) share-based compensation. Excluding the impact of non-qualified deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $261.4$770.1 million in 20242025, as compared to 2023.2024. Operating expenses for the year ended December 31, 20242025, included approximately $5.0$64.3 million costs related to the Transaction,Transaction for integration, and operating expenses for the year ended December 31, 20232024, included approximately $1.9$5.0 million non-recurring integration and retentionin costs related to the acquisition of Somerset CPAs and Advisors ("Somerset").Transaction. The increase in operating costsexpenses was driven by $194.5$581.3 million higher personnel costcost, (of which the Transaction contributed approximately $128.6 million), $14.1 million higher direct costs, $11.3$50.4 million higher depreciation and amortization costs, $10.9$46.9 million higher facility costs, $10.7$35.8 million higher direct costs, $20.3 million higher technology costs, $10.2$16.4 million higher professional fees, $9.6 million higher travel and entertainment costs, $7.6$5.1 million higher professionalmarketing fees,costs, and $2.2$3.5 million higher bad debt expense.Theexpense, increasesand were offset by a $0.1$0.8 million decreaseincrease in other discretionary spending. Personnel costs and other operating expenses are discussed in further detail under “Operating Practice Groups.”

Our G&A expenses increased by approximately $50.8$12.6 million, or 87.6%,11.6%, in 20242025, as compared to 2023,2024, and increaseddecreased to 6.0%4.4% of revenue from 3.6%6.0% of revenue for the prior year. The non-qualified deferred compensation plan increased G&A expenses by $3.0 million in 2025, and by $2.4 million in 2024 and by $2.3 million in 2023.2024. Excluding the impact of the deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, G&A expenses would have been $118.4 million, or 4.3% of revenue, in 2025, as compared to $106.4 million, or 5.9% of revenue, in 2024 as compared to $55.7 million, or 3.5% of revenue, in 2023,2024, an increase of $50.7$12.0 million in 20242025 as compared to prior year. The increase was primarily driven by $38.5 million higher professional service fees associated with the Transaction, a $2.9 million higher legal reserve, $2.5$6.6 million higher personnel costs, $$6.2 1.5million higher marketing expenses, $2.4 million higher technology costs, $2.3 million higher insurance costs and $1.1$1.6 million higher marketingfacility expenses.costs. Other discretionary spending increased by approximately $3.3$1.2 million to support the growth in business activities. These increases were partially offset by an $8.3 million decrease in professional service fees.

G&A expenses for the year ended December 31, 2025 and 2024 included a$24.8 million and $43.7 millionmillion, respectively, of costs related to the Transaction. G&A expenses for the year ended December 31, 2023 included a $1.9 million non-recurring transaction and integration costs related to the Somerset acquisition.

Interest Expense - On November 1, 2024 we entered into the 2024 Credit Facilities. Interest expense was $107.2 million in 2025, compared to $34.4 million in 2024, compared to $20.1 million in 2023.2024. Our blended average debt balance and blended weighted average interest rate was $1,517.9 million and 6.56%, respectively, in 2025, as compared to $538.6 million and 6.00%, respectively, in 2024, as compared to $364.1 million and 5.23%, respectively, in 2023.2024. The increase in interest expense in 20242025 as compared to 20232024, was driven by a higher average debt balance as well as higher weighted average effective interest rate. Our debt is further discussed in Note 10, Debt and Financing Arrangements, to the accompanying consolidated financial statements.

Other Income (Expense), net - The majority of “Other income (expense), net” consists of net gains and losses associated with the value of the non-qualified deferred compensation plan as discussed above, net adjustments to the fair value of our contingent purchase price liability related to prior acquisitions, as well as gains or losses related to the sale of assets. Other income of $13.5$33.3 million in 20242025 included a $21.1$23.3 million net gain related to the deferred compensation plan. Excluding the impact of the deferred compensation plan the Other Income (Expense), net balance for the year ended December 31, 2025, would be income of $10.0 million. Other income of $13.5 million in 2024 consisted of a net gain of $21.1 million related to the deferred compensation plan. Excluding the impact of the deferred compensation plan, the Other Income (Expense), net balance for the year ended December 31, 2024, would be an expense of $7.6 million. Excluding the impact of the deferred compensation plan from other income (expense), net, would result in an increase of $17.6 million primarilyfor relatedthe year ended December 31, 2025, compared to the $7.0same period in 2024. The increase was primarily due to a $12.5 million expenselegal increasesettlement gain, $4.6 million higher contingent earnout adjustment, $3.0 million higher other miscellaneous income, net, and $1.7 million higher interest income. In addition, we recorded a loss of approximately $4.3 million primarily due to theearly fairlease valueterminations, ofwhich did not occur in 2024. As a result, the contingentexpenses purchaseassociated pricewith liability.the loss on assets decreased by $4.2 million in 2025 as compared to 2024.

The decreaseincrease in income tax expense from 20232024 to 20242025 was primarily driven by the reductionincrease in pre-tax income from 20232024 to 2024.2025. The increasedecrease in the effective tax rate from 20232024 to 20242025 was primarily due to the disallowance of meals and entertainment expenseexpenses having a greaterlesser unfavorable impact against a lowerhigher pre-tax income in 2024.2025.

Operating expenses increased by $238.5$751.2 million in 20242025, as compared to 2023,2024, primarily as a result of $178.9$578.3 million, or 22.5%, inmillion higher personnel costs, of which acquisitions contributed approximately $141.4 million to the increasecosts primarily driven by the Transaction in 2024.2025. Compared to the same period in 2023, direct costs,2024, depreciation and amortization expense, direct costs, facility costs, technology costs, travel and entertainment costs, professional service costs, andmarketing allocationscosts, increasedbad bydebt $15.8 million, $11.6 million, $10.7 million, $7.9 million, $7.1 million, $5.9 million,expense, and $1.6 million, respectively, as well as $1.0 million lower other discretionaryemployee costs to support business growth.growth increased by $51.7 million, $40.7 million, $40.1 million, $18.4 million, $10.8 million, $5.5 million, $2.8 million and $2.8 million, respectively. Operating expense as a percentage of revenue increaseddecreased to 85.4% in 2025 from 89.1% in 2024 from 84.0% in 2023.2024.

The Benefits and Insurance Services practice group revenue in 20242025 grew by 4.8%2.1% to $409.6 million from $401.0 million from $382.6 million in 2023. Same-unit revenue increased by $15.3 million, or 4.0%, in 2024 when compared to the same period in 2023.2024. The increase primarily driven by a $16.3$11.2 million increase in employee benefit and retirement benefit services lines, as well as a $0.7$6.1 million increase infrom otherpayroll project-basedand human capital related services, partially offset by a decrease of $1.8$8.7 million in property and casualty services.

Operating expenses increased by $17.8$6.4 million in 20242025 as compared to 2023,2024. This increase was primarily driven by $14.8direct costs and personnel costs which increased by $5.6 million and $1.7 million, orrespectively, 6.1%,when higher personnel costs, attributable primarilycompared to the amountsame period in 2024. This increase was partially offset by a decrease of annual$1.3 meritmillion increases,of bonus accruals,depreciation and investmentamortization in new sales producers. Compared to 2023, technology costs, direct costs,expenses and professionala servicedecrease costs,of increased$0.4 bymillion $1.4 million, $0.8 million, and $0.7 million, respectively. In addition,in other miscellaneous discretionary costs increased by approximately $0.1 million, primarily driven by higher employee costs to support business growth.costs. Operating expense as a percentage of revenue remained relatively unchanged at 81.9%81.7% in 20242025, as compared 81.2%to 81.9% in 2023.2024.

RevenueDuring growththe inyear thisended practiceDecember group31, 2024, we completed the sale of CBIZ KA Consulting Services, LLC ("KA Consulting"), which was a component of the National Practices group. For the year ended December 31, 2024, KA Consulting contributed approximately $8.4 million of revenue. The remaining National Practice Group is primarily driven by our cost-plus contract with a single client, which has existed since 1999. The cost-plus contract is a five-year contract with the most recent renewal through December 31, 2028. RevenuesThe fromdecrease thisin singlerevenue clientand accountedin foroperating approximatelyexpense 75%was attributed to the result of the Nationalsale Practiceof group’sKA revenue. Operating expenses have increased mainly due to increases in salary and benefits costs.Consulting.

Total operating expenses increased by $5.1$16.5 million in 20242025 as compared to 2023.2024. The non-qualified deferred compensation plan increased operating expenses by $20.3 million in 2025 and by $18.8 million in 2024 and by $17.2 million in 2023.2024. Excluding the non-qualified deferred compensation expenses, operating expense increased by approximately $3.6$15.0 million, primarily driven by $5.6$5.9 million higher professional service fees, $5.3 million higher facility costs, $2.6 million higher personnel costs, offsetand by $1.1$1.2 million lower marketing expenses and $0.9 million lowerhigher other miscellaneous discretionary costs.spending to support business growth.

Total G&A expenses increased by approximately $50.8$12.6 million, or 87.6%,11.6%, infor 2024the year ended December 31, 2025 as compared to 2023.2024. The non-qualified deferred compensation plan increased G&A expenses by $3.0 million in 2025 and by $2.4 million in 2024 and by $2.3 million in 2023.2024. Excluding the impact of the deferred compensation plan, G&A expenses would have increased by $50.7$12.0 million in 20242025 as compared to prior year. The increase was primarily driven by $38.5 million higher professional service fees associated with the Transaction, a $2.9 million higher legal reserve, $2.5$6.6 million higher personnel costs, $$6.2 1.5million higher marketing expenses, $2.4 million higher technology costs, $2.3 million higher insurance costs and $1.1$1.6 million higher marketingfacility expenses.costs. Other discretionary spending increased by approximately $3.3$1.2 million to support the growth in business activities. InThese addition,increases G&Awere expensesoffset forby thean year ended December 31, 2024 included $43.7$8.3 million costsdecrease relatedin toprofessional theservice Transaction. G&A expenses for the year ended December 31, 2023 included $1.9 million non-recurring transaction and integration costs related to the Somerset acquisition.fees.

Total other expense, net increased by $18.4$51.8 million to $21.6$73.5 million from $3.2$21.6 million in 2023.2024. Total other expense, net includes a net gaingains of $21.1$23.3 million and a net gain of $19.5$21.1 million associated with the non-qualified deferred compensation plan in 20242025 and 2023,2024, respectively. Excluding the impact of the non-qualified deferred compensation plan, total other expense, net would have been $96.8 million in 2025 and $42.8 million in 2024 and $22.7 million in 2023,2024, a net increase in expense of approximately $20.1$54.0 million. The increase was drivenprimarily bydue $14.2to $72.8 million higher interest expenseexpense, duepartially offset by a gain from a legal settlement of $12.5 million recorded to theother borrowingincome under(expense), thenet, 2024 Credit Facilities to finance the Transaction, as well as higher blended weighted average effective interest rate experienced in 2024 as compared to 2023, $4.4$4.6 million higher contingentfair earnoutvalue expenseadjustments, associatedan withincrease priorof acquisitions,$1.7 million of interest income, and $2.5$0.1 million higher other miscellaneous expenses.adjustments.

We generate strong cash flows from operations and have access to $556.0$415.5 million under the 2024 Credit Facility,Facilities, which enables us to fund investment and operating projects that are designed to optimize stockholder return. Cash flows from operations and available capital resources allow us to make strategic acquisitions, repurchase shares of our common stock when accretive to stockholders, meet working capital needs, and service our debt. Generally, we maintain low levels of cash and apply any available cash to pay down our outstanding debt balance. Due to the seasonal nature of the Financial Services practice group’s accounting and tax servicesservices, which are concentrated in the first four months of the fiscal year, we historically generate mucha significant portion of our cash flows during the last three quarters of the fiscal year.

Our working capital management primarily relates to trade accounts receivable, accounts payable, incentive-based compensation and other assets, which consistsconsist of other receivables and prepaid assets typically related to activities in the normal course of our business operations. At any specific point in time, working capital is subject to many variables, including seasonality and the timing of cash receipts and payments, most notably in the timing of insurance premiums to the carriers within our Benefits and Insurance Services practice group. We have restricted cash on deposit from clients in connection with the pass-through of insurance premiums to the carrier with the related liability for these funds recorded in “Accounts payable” in the accompanying Consolidated Balance Sheets.

2024 compared to 2023 - Cash provided by operating activities was $123.7$192.5 million during 2024,2025, consisting of net income of $41.0$115.4 million and certain non-cash items, such as depreciation and amortization expense of $48.1$98.3 million, share-based compensation expense of $13.8$26.0 million, amortization expense of deferred financing fees of $5.5 million, bad debt expense of $3.8$7.3 million, deferred income tax of $4.6 million, and an adjustment to the fair value of contingent purchase consideration of $7.0$2.6 million, and $23.4other expense of $5.1 million, primarily consisting of a non-cash write-off of lease incentive receivables associated with terminated facility leases. These were offset by $71.6 million of use of cash from working capital management offsetand bya deferred income tax of $8.6$0.7 million and $4.93 million gainloss on sale of operations, net of tax.

Cash provided by operating activities was $153.5$123.7 million during 2023,2024, consisting of net income of $121.0$41.0 million and certain non-cash items, such as depreciation and amortization expense of $36.3$48.1 million, share-based compensation expense of $12.3 million, deferred income tax of $11.3$13.8 million, bad debt expense of $1.6$3.8 million, adjustment to the fair value of contingent purchase consideration of $2.7$7.0 million, offsetand by $29.0$23.4 million use of cash generated from working capital management.management offset by deferred income tax of $8.6 million and a $4.9 million gain on sale of operations, net of tax.

20242025 - Net cash used in investing activities in 20242025 consisted primarily of $1,087.5$17.0 million cash paid for the Transaction and other 2024 business acquisitions, $12.9 million in capital expenditures, $1.3$4.0 million net purchases and change of client fund investments, and $34.7$1.6 million cash paid for a business acquisition. These investing cash outflows were offset with $5.2 million payments primarily related to thecollections ato $22.1notes receivable and $1.5 million notescash received related to CBIZprior CPAs,year and other working capital adjustments related payments, partially offset by $7.1 million proceeds received from the sale of certain assets.divestiture.

20232024 - Net cash used in investing activities in 20232024 consisted primarily of $53.1$1,087.5 million relatedcash topaid for the Transaction and other 2024 business acquisitions, $23.1$12.9 million in capital expenditures, $1.3 million net purchases of client fund investments, and $10.3$34.7 million payments ofprimarily related to the $22.1 million notes to CBIZ CPAs, and other working capital adjustments related to previously completed acquisitions,payments, partially offset by $4.3$7.1 million proceeds received from the sale of client funds investment and $3.0 million proceeds received from sale of certain assets.

20242025 - Net cash provided by financing activities in 20242025 consisted of $1,108.5$51.5 million net proceeds from our 2024 Credit Facilities and a net increase of $16.0$30.8 million in client fund obligations, partially offset by $11.5$160.1 million used to repurchase shareshares, $7.8 million used to repurchase shares for tax withholding purposes, $56.8$58.7 million of contingent consideration payments for prior acquisitions, and $20.7$1.0 million deferred financing fees paid in connection with the 2024 Credit FacilitiesFacilities, 2023and -$0.5 Net cashmillion used infor financing activities in 2023 consistedpayments of $73.8notes million of share repurchases, $45.2 million of contingent consideration payments for prior acquisitions, and a net decrease of $13.6 million in client fund obligations, partially offset by $8.8 million in proceeds from the exercise of stock options and $46.7 million net proceeds and borrowings under our prior credit facility.payable.

Credit Facility - Our primary financing arrangement is the $2.0$2,000.0 billionmillion unsecuredsecured credit facility, which is that certain Amended and Restated Credit Agreement, by and among CBIZ Operations, Inc., CBIZ,as Inc.the Borrower, the Company, the several banks, financial institutions, institutional lenders and other investors from time to time party thereto as the Lenders, and Bank of America, N.A., as administrativeAgent, agentas Issuing Bank and bank,as Swing Line Bank (as amended by that certain First Amendment, dated as of March 7, 2025 and otheras participatingfurther banks,amended by that certain Second Amendment, dated as of April 29, 2025), which provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases, and matures in 2029. At December 31, 2024,2025, we had $1,420.9$1,472.4 million outstanding under the credit facility, as well as letters of credit and license bonds totaling $5.4 million. Available funds under the credit facility, based on the terms of the commitment, were approximately $556.0$415.5 million at December 31, 2024.2025. The blended weighted average interest rate under the credit facility was 6.56% in 2025 and 6.00% in 2024 and 5.23% in 2023.2024. The credit facility allows for the allocation of funds for future strategic initiatives, including acquisitions and the repurchase of our common stock, subject to the terms and conditions of the credit facility.

During the year ended December 31, 2024,2025, we completed fiveno material business acquisitions. Refer to Note 2, Business Combinations, toUnder the accompanyingShare consolidatedRepurchase financialProgram, statementswe repurchased 1.5 million shares of our common stock for furthera discussiontotal oncost acquisitions.of We$109.1 repurchasedmillion nounder the ROFR Agreement and 0.9 million shares of our common stock in the open market induring 2024the andyear 1.3ended December 31, 2025, for a total cost of $50.9 million. We repurchased no shares on the open market during the year ended December 31, 2024. Shares repurchased to settle statutory employee withholding related to vesting of stock awards were 0.1 million shares at a totalcost of $7.8 million during the year ended December 31, 2025, and 0.2 million shares at a cost of approximately $65.1$11.5 million induring 2023.the year ended December 31, 2024. Refer to Note 14, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program.

Cash Requirements - Cash requirements for the remainder of 20252026 and beyond will include the repayment of outstanding debt and related interest, share repurchases through both our ROFR Agreement and open market purchases, making strategic acquisitions, funding seasonal working capital requirements, making contingent purchase price payments for previous acquisitions, share repurchases, income tax payments, and capital expenditures. We believe that cash provided by operations, as well as available funds under our 2024 Credit Facilities will be sufficient to meet cash requirements for 20252026 and beyond. We believe that cash provided by operations, as well as available funds under the 2024 Credit Facilities will be sufficient to meet cash requirements for the next 12 months and beyond. Refer to Note 10, Debt and Financing Arrangements, to the accompanying consolidated financial statements for further discussion of the 2024 Credit Facilities.

As of December 31, 2024,2025, the notional value of all of our interest rate swaps waswere $150.0$500.0 million, with maturity dates ranging from April,July 202514, 2026 to October,July, 2028.2030. For further details on our interest rate swaps, refer to Note 7, Financial Instruments, to the accompanying consolidated financial statements.

Goodwill is not amortized, but rather is tested for impairment annually during the fourth quarter. In addition to our annual goodwill test, on a periodic basis, we are required to consider whether it is more likely than not (defined as a likelihood of more than 50%) that the fair value has fallen below its carrying value, thus requiring us to perform an interim goodwill impairment test. Intangible assets with definite lives, such as client lists and non-compete agreements, are amortized using the straight-line method over their estimated useful lives (generally ranging from three to fifteen years). We review these assets for impairment whenever events or changes in circumstances (including declines in the price of our common stock and market capitalization, deterioration in macroeconomic conditions, and declining financial performance in comparison to projected results) indicate an asset’s carrying value may not be recoverable. Recoverability is assessed based on a comparison of the undiscounted cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis or market comparable method.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 20252025, as amended and as filed with the SEC. These risks could materially and adversely affect the business, financial condition results of operations and cash flows of CBIZ. There have been no material changes to the risk factors previously disclosed under "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.2025, as amended, except for the following:

The following discussion is intended to assist in the understanding of our financial position at MarchJune 31,30, 2026 and December 31, 2025, results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025, and cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025.2025, as amended. This discussion and analysis contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in “Item 1A. Risk Factors” included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025.2025, as amended.

We provide professional business services, products and solutions that help our clients grow and succeed by better managing their finances and employees. These services are primarily provided to small and medium-sized businesses, as well as individuals, governmental entities, and not-for-profit enterprises throughout the United States and parts of Canada. As discussed in Note 13,14, Goodwill, the National Practices practice group, which consisted of a single reporting unit, is now included in the Financial Services practice group to align our internal management and reporting structure with the services provided. As a result of these changes, we now operate with two reportable segments: Financial Services and Benefits and Insurances Services. Financial results of the Financial Service Practice Group for the three and six months ended MarchJune 31,30, 2025 were adjusted to reflect the change in reportable segments.

Refer to the Annual Report on Form 10-K for the year ended December 31, 20252025, as amended, for further discussion of our business and strategies, as well as the external relationships and regulatory factors that currently impact our operations.

Revenue for the three months ended MarchJune 31,30, 2026 increaseddecreased by $10.6$1.3 million, or 1.3%,0.2%, to $848.6$682.2 million from $838.0$683.5 million for the same period in 2025. Same-unit revenue increaseddecreased by approximately $8.4$3.5 million, or 1.0%,0.5%, as compared to the same period in 2025. Revenue from newly acquired operations contributed $2.1$2.2 million of incremental revenue for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. A detailed discussion of revenue for the three months ended June 30, 2026 by practice group is included under "Operating Practice Groups."

For the three months ended MarchJune 31,30, 2026, net income was $161.6$18.6 million, or $2.63$0.31 per diluted share, compared to $122.8$41.9 million, or $1.91$0.66 per diluted share, for the same period in 2025. For the six months ended June 30, 2026, net income was $171.4 million, or $2.83 per diluted share, compared to $164.7 million, or $2.58 per diluted share, for the same period in 2025. Refer to “Results of Operations" for a detailed discussion of the components of net income.

Our primary business objective is funding organic growth acceleration and meeting working capital needs. This includes investments in client service delivery and emerging technology that support revenue growth and enhance operational excellence. Following the completion of the Marcum Transaction, our second priority is to pay down debt to be at a net leverage ratio of less than 2.5x over time. As a result of the Marcum Transaction and related 2024 Credit Facilities, we have $1,551.5$1,473.5 million of outstanding debt under the 2024 Credit Facilities as of MarchJune 31,30, 2026. In addition, we believe that repurchasing shares of our common stock can be an attractive use of capital and an efficient means to provide value to our stockholders. We will also remain focused on making strategic acquisitions that allow us to strengthen our presence in existing markets, expand into high growth industries, and broaden our services to our clients.

During the threesix months ended MarchJune 31,30, 2026, we repurchased 0.10.2 million shares of our common stock for a total cost of $3.5$7.4 million under the ROFR Agreement and 1.02.1 million shares of our common stock in the open market for $25.5$60.1 million pursuant to our Share Repurchase Program (defined below). Additionally, to settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares of our common stock at a cost of $2.6 million during the threesix months ended MarchJune 31,30, 2026. During the threesix months ended MarchJune 31,30, 2025, we maderepurchased no1.0 sharemillion repurchasesshares of our common stock for a cost of $71.3 million under the ROFR Agreement orand inno share repurchases from the open market. To settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares at a cost of $7.7$7.8 million during the threesix months ended MarchJune 31,30, 2025. Refer to Note 10,11, Common Stock, to the accompanying unaudited condensed consolidated financial statements for further details.

The following tables summarize total revenue for the three and six months ended MarchJune 31,30, 2026 and 2025:

(1)During the threesix months ended MarchJune 31,30, 2026, the National Practice practice group was combined with the Financial Service practice group to better align with internal management and reporting structure. As a result, the Financial Services revenue for the three and six months ended MarchJune 31,30, 2025 was adjusted to reflect this change.

Refer to Note 13, Employee Benefits, to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 20252025, as amended, for further discussion on the Non-qualified Deferred Compensation Plan.

LossesIncome and expenses related to the deferred compensation plan assets for the three and six months ended MarchJune 31,30, 2026 and 2025 were recorded as follows (in thousands, except percentages):

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three and six months ended MarchJune 31,30, 2026 and 2025 were as follows:

The following tables summarize total operating expenses for the three and six months ended MarchJune 31,30, 2026 and 2025:

(1)During the threesix months ended MarchJune 31,30, 2026, the National Practice practice group was combined with the Financial Service practice group to better align with internal management and reporting structure. As a result, the Financial Services operating expenses for the three and six months ended MarchJune 31,30, 2025 was adjusted to reflect this change.

Three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025. Total operating expenses for the three months ended MarchJune 31,30, 2026 increased by $12.7$14.2 million, or 2.1%,2.4%, to $622.6$609.8 million as compared to $609.9$595.6 million in the same period in 2025. The deferred compensation plan decreasedincreased operating expenses by $3.1$17.1 million for the three months ended MarchJune 31,30, 2026 and increased operating expenses by $2.4$11.7 million duringin the same period in 2025. Excluding the impact of deferred compensation,compensation expenses, which waswere recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $625.6$592.7 million and $612.3$583.9 million, or 73.7%86.9% and 73.1%85.4% of revenue, for the three months ended MarchJune 31,30, 2026 and 2025, respectively. In addition, operating expenseexpenses for the three months ended MarchJune 31,30, 2026 and 2025, included approximately $20.7$14.8 million and $9.0 million, respectively, of integration costs associated with the Marcum Transaction, and the operating expenses for the three months ended June 30, 2025 included approximately $11.1 million of integration costs associated with the Marcum Transaction.

The majority of our operating expenses relate to personnel costs, which include (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation, and (iv) stock-based compensation. Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $13.3$8.8 million during the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025, driven by $4.6$11.5 million higher facilitypersonnel costs,costs $2.7and million higher technology costs, $2.5$2.3 million higher direct costs, $1.8partially offset by $1.7 million higherlower personneldepreciation and amortization costs, $1.1$2.9 million higherlower travel and entertainmentfacility costs, and $0.6$3.4 million higherlower professional service costs.costs . Personnel costs are discussed in further detail under “Operating Practice Groups” below.

Three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025. The deferred compensation plan decreasedincreased G&A expenses by $0.3$2.3 million for the three months ended MarchJune 31,30, 2026, and by $0.1$1.5 million during the same period in 2025. The G&A expenses, excluding the impact of the deferred compensation plan, would have been $29.9$36.1 million, or 3.5%5.3% of revenue, for the three months ended MarchJune 31,30, 2026, compared to $28.2$26.2 million, or 3.4%3.8% of revenue, for the same period in 2025, an increase of $1.7approximately $9.9 million. The increase in G&A expenses was primarily duedriven toby approximately$4.8 $1.2million in higher personnel costs, $4.8 million higher professional services costs, $1.4 million higher marketing costs, and $1.4 million higher technology costs, $0.4partially offset by $0.5 million higherdecrease facility costs, and $0.1 million higherin other discretionary spending to support business growth.costs. The G&A expenses for the three months ended MarchJune 31,30, 2026 and 2025,2025 included approximately $3.1$4.5 million and $6.7$8.1 million, respectively,million of integration costs primarily associated with the Marcum Transaction.

(1)Other expense,income, net includes a net lossgain of $3.4$19.4 million during the three months ended MarchJune 31,30, 2026, compared to a net lossgain of $2.6$13.2 million for the same period in 2025, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes. The adjustments to the investments held in a rabbi trust related to the deferred compensation plan are offset by a corresponding increase or decrease to compensation expense, which is recorded as “Operating expenses” and “G&A expenses.” The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share. In addition, included in other expense,income (expense), net for the three months ended MarchJune 31,30, 2026 and 2025, is expensean income of $0.2$1.8 million and $0.5an expense of $1.0 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

Three and six months ended MarchJune 31,30, 2026 compared with MarchJune 31,30, 2025. During the three months ended MarchJune 31,30, 2026, our average debt balance and weighted average effective interest rate were $1,466.6$1,505.2 million and 6.11%,6.01%, respectively, compared to $1,443.4$1,542.4 million and 6.57%,6.75%, respectively, for the same period in 2025. The decrease in interest expense for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025 was $1.2 million. This was primarily driven by the lower average debt balance and interest rates.

Three and six months ended MarchJune 31,30, 2026 compared with MarchJune 31,30, 2025. During the threesix months ended MarchJune 31,30, 2026, our gain from acquisition related adjustment, net was $58.0 millionmillion, compared to no gain for the same periodperiods in 2025. As stated in Note 3,4, Business Combinations, to the accompanying unaudited condensed consolidated financial statements, the Company recorded a $57.2 million working capital adjustment and related purchase price settlement, which was recognized as a gain within acquisition related adjustments in Total other income (expense), net in the consolidated statements of operations. Additionally, the Company also recorded anotheran adjustment related to acquisitions of $0.8 million within gains from acquisition related adjustments.adjustments during the six months ended June 30, 2026.

Other Expense,Income, Net

Three months ended March 31, 2026 compared with March 31, 2025. For the three months ended MarchJune 31,30, 2026, otherOther expense,income, net includes a net lossgain of $3.4$19.4 million associated with the non-qualified deferred compensation plan. For the same period in 2025, otherOther expense,income, net includes a net lossgain of $2.6$13.2 million associated with the non-qualified deferred compensation plan. Excluding the impact of the deferred compensation plan,plan thefrom otherOther expense,income, net for the three months ended MarchJune 31,30, 2026 would have been aan lossexpense of $0.6$5.5 million,million as compared to aan gainincome of $0.6$12.2 million duringin the same period in 2025.2025, a decrease of approximately $17.7 million. The changedecrease was primarily due to a $1.1$7.2 million higherlegal settlement loss onrecorded salein ofthe assetsthree andmonths ended June 30, 2026 as compared to a $0.1$12.5 million increasegain offrom othera miscellaneouslegal expense.settlement recorded in the same period in 2025.

Three and six months ended MarchJune 31,30, 2026 compared with MarchJune 31,30, 2025. The effective tax rate for the three months ended MarchJune 31,30, 2026 was 28.6%,21.5%, compared to an effective tax rate of 29.0%27.4% for the same period in 2025. The decrease in the effective tax rate is primarily dueattributed to a lower effective state tax ratebenefit in the current period compared to the same period in 2025 reduced by tax expenserecognized in the current period related to the purchase of certain transferrable tax credits, partially offset by tax expense related to stock-based compensation. The increasedecrease in income tax expense of $14.7$10.8 million for the three months ended MarchJune 31,30, 2026, when compared to the same period in 2025, was primarily driven by the increase inlower pre-tax income in 2026.2026 and the tax benefit recognized from the purchase of certain transferrable tax credits.

During the threesix months ended MarchJune 31,30, 2026, the National Practice practice group was combined with the Financial Service practice group to better align with internal management and reporting structure. As a result of these changes, we now operate with two reportable segments: Financial Services and Benefits and Insurances Services. Financial results of the Financial Service Practice Group for the three and six months ended MarchJune 31,30, 20252025, were adjusted to reflect the change in reportable segments. A description of these groups' operating results and factors affecting their businesses is provided below.

Three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025.

The Financial Services practice group revenue for the three months ended MarchJune 31,30, 2026 grewdecreased by 2.1%0.2% to $740.3$580.3 million from $725.0$581.6 million during the same period in 2025. Same-unit revenue grewdeclined by $13.2$3.4 million, or 1.8%,0.6%, primarily driven by those units that provide advisory services, which increased by approximately $7.3 million, the units that provide traditional accounting and tax-related services, which increaseddecreased $5.2$8.0 million and by those units that provide project based advisory services, which decreased by $1.4 million, The decrease was partially offset by the increase in revenue from the units that provide government healthcare compliance business consulting, which increased by approximately $0.5$3.5 million, and the units that provide technology services, which increased $0.2by $2.4 million.

We provide a range of services to affiliated CPA firms under joint referral and administrative service agreements (“ASAs”). Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $219.4$148.6 million and $234.3$164.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Operating expenses for the three months ended MarchJune 31,30, 2026 increased by $10.0$4.9 million, or 1.9%,1.0%, as compared to the same period in 2025. ComparedThe increase is primarily due to the same periodincreases in 2025, facility costs, subscription costs, travel and entertainment costs, technology costs, direct costs,costs and other discretionary spending to support business growth increased by approximately $4.7 million, $1.9 million, $1.2 million, $1.1 million, $0.9 million, and $0.2 million, respectively.spending. Operating expenses as a percentage of revenue decreasedincreased slightly to 71.7%86.1% for the three months ended MarchJune 31,30, 2026 from 71.8%85.1% of revenue for the same period in 2025.

Three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025.

Operating expenses for the three months ended MarchJune 31,30, 2026 decreasedincreased by $0.1$2.3 million, or 0.1%,2.7%, when compared to the same period in 2025. The decreaseincrease was not material, and operating expenses within the Benefits and Insurance practice group remained generally consistent period over period. Operating expenses as a percentage of revenue increased slightly to 78.7%84.7% for the quarter ended MarchJune 31,30, 2026 from 75.6%82.4% of revenue for the same period in 2025.2025 due to decrease in revenue.

Three months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025.

Total operating expenses increased by $2.8$7.0 million during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The non-qualified deferred compensation plan decreasedincreased operating expenses by $3.1$17.1 million for the three months ended MarchJune 31,30, 2026 and increased operating expenses by $2.4$11.7 million during the same period in 2025. Excluding the impact of non-qualified deferred compensation plan, Corporate operating expenses increased by $3.4$1.6 million during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The increase was primarily driven by $1.4 million higher technology costs, $1.2 million higher professional service costs, $0.3 million higher depreciation costs, $0.3$0.4 million higher travel and entertainment costs, $0.1$0.3 million higher marketing costs, andoffset $0.1by $0.5 million higherdecrease in facility related costs, and $0.3 million other discretionary costs.

Total corporate G&A expenses increased by $1.5$10.7 million, or 5.3%,38.8%, during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The non-qualified deferred compensation plan decreasedincreased corporate G&A expenses by $0.3$2.3 million for the three months ended MarchJune 31,30, 2026 and increased corporate G&A expenses by $0.1$1.5 million during the same period in 2025. Excluding the impact of the non-qualified deferred compensation plan, corporate G&A expense increased by approximately $1.7$9.9 million during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The increase in corporate G&A expenses was primarily duedriven toby approximately$4.8 $1.2million in higher personnel costs, $4.8 million higher professional services costs, $1.4 million higher marketing costs, and $1.4 million higher technology costs, $0.4partially offset by $0.5 million higherdecrease facility costs, and $0.1 million higherin other discretionary spending to support business growth.costs. The corporate G&A expenses for the three months ended MarchJune 31,30, 2026 and 2025,2025 included approximately $3.1$4.5 million and $6.7$8.1 million, respectively,million of integration costs primarily associated with the Marcum Transaction.

Total other income (expense),expense, net increased by $58.2$7.8 million during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. For the three months ended MarchJune 31,30, 2026, total other income (expense),expense, net included a net lossgain of $3.4$19.4 million associated with the non-qualified deferred compensation plan. For the same period in 2025, total other income (expense),expense, net included a net lossgain of $2.6$13.2 million associated with the non-qualified deferred compensation plan. Excluding the impact of the non-qualified deferred compensation plan, total other income (expense),expense, net increased by $59.0$14.1 million for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025. The increase was primarily due to a $57.2$7.2 million gainestimated relatedlegal toloss the final working capital settlement and other acquisition related adjustments of $0.8 million, as well as $1.0 million lower interest expense. See Note 3, Business Combinations, to the accompanying unaudited condensed consolidated financial statementsrecorded in the three months ended MarchJune 31,30, 2026 foras furthercompared detail.to a $12.5 million gain from a legal settlement recorded in the same period in 2025, offset by $3.6 million lower interest expense and $2.0 million favorable adjustment to the fair value of contingent consideration related to prior acquisitions.