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

•Our ability to grow and retain our member base, including uncertainties in the assumptions we use to determine our new pet acquisition spend, variable costs of attracting new members through online channels such as social media or search engines and from leads and referrals generated from Territory Partners, veterinarians and other third parties;

WePrior haveto 2025, we had incurred significant cumulative net losses since our inception. We incurred net losses of $9.6 million and $44.7 million in the years ended December 31, 2024 and 2023, respectively,inception and as of December 31, 2024,2025, we had an accumulated deficit of $225.9$206.5 million. We have funded our operationsbusiness through our operations, equity financings, and borrowings under revolving lines of credit and term loans. Our ability to achieve and maintain profitability will depend, in significant part, on obtaining new members, retaining our existing members, maintaining relationships with our strategic partners, and ensuring that our expenses, including new pet acquisition expense, do not exceed our revenue. We expect to make significant expenditures and investments in new pet acquisition and product initiatives and these expenditures may not result in additional growth. Our growth in revenue and membership may not be sustainable or may decrease, and we may not generate sufficient revenue to consistently achieve profitability. Additionally, we budget for our expenses based, in significant part, on our estimates of future revenue and many of these expenses are fixed in the short term. As a result, we may be unable to adjust our spending in a timely manner if our revenue falls short of our estimates. Accordingly, any significant shortfall of revenue in relation to our estimates could have an immediate negative effect on our financial results.

•maintain and increase positive relationships with veterinarians and other referral and lead sources;

•continue to offer and develop a portfolio of products and adjacent products with a superior value with competitive features and rates;

•generate business to replace revenue generated through our relationship with Pets Best, since we expect our relationship with Pets Best willto continue to diminish and our business activity with them will terminate over future periods;

We have made and plan to continue to make significant investments to grow our member base. We spentinvested $71.4$85.4 million in new pet acquisition expense to acquire new members for the year ended December 31, 2024.2025. We base our decisions regarding our new pet acquisition expenditures primarily on our internal rate of return generated on an average pet. This analysis depends substantially on estimates and assumptions based on our historical experience with pets enrolled in earlier periods, including our key operating metrics. If our estimates and assumptions regarding our internal rate of return and the lifetime value of the pets that we project to acquire and our related decisions regarding investments in new pet acquisition prove incorrect, or if our calculation of internal rate of return and lifetime value of the pets that we project to acquire differs significantly from that of pets acquired in prior periods, we may be unable to recover our new pet acquisition expenses or generate profits from our investment in acquiring new members. Moreover, if our new pet acquisition expenses increase or we invest in member acquisition channels that do not ultimately result in the expected number of new member enrollments or enrollments are at a lower subscription price or cancel before we recoup our acquisition expenses, the return on our investment may be lower than we anticipate irrespective of the lifetime value of the pets that we project to acquire as a result of the new members. If we cannot generate profitssufficient returns from this investment, we may need to alter our growth strategies, and our growth rate and operating results may be adversely affected. In addition, even if we decrease our average pet acquisition cost, our operating margins may differ from our expectations due to incorrect assumptions relating to existing members adding new pets or referring friends, expenses for member support, and other factors, some of which we do not control.

Our average pet acquisition cost and the number of new pets we enroll depends on a number of factors and assumptions, including the effectiveness of marketing initiatives, including communication of our value proposition, and sales execution by us and marketingour initiatives,channel partners, changes in costs of media, the mix of our pet acquisition expenditures and the competitive environment. Our average pet acquisition cost has significantly varied over time. In the future, our average pet acquisition cost may vary significantly period to period based upon marketing initiatives we choose to employ.employ, including those related to our brand development. Market recognition and acceptance of any new brands may take longer than expected, requiring us to spend more on our marketing efforts to acquire new pets, which may negatively impact our internal rate of return. We also regularly test new member acquisition channels and marketing initiatives, including direct-to-consumer initiatives, which often are more expensive than our traditional veterinary-focused marketing channels and generally increase our average acquisition costs.

The pricing of our subscriptions reflects amounts we expect to pay for a pet’s medical care and we derive these prices from assumptions that we make based on our analytics platform. Our analytics platform draws upon pet data we collect and we use this data to price our policy in response to a number of factors, including a pet’s species, breed, age, gender and location. Factors related to pet location include the current and assumed changes in the cost and availability of veterinary technology and treatments and local veterinary hospital preferences. Some data that feeds into our analytics platform is provided by third-party sources and these sources may limit or prevent us from accessing the data. Additionally, the assumptions we make about breeds and other factors in pricingpricing, such as the estimated impact of inflation and tariffs, may prove to be inaccurate and, accordingly, these pricing analytics may not accurately reflect the expense that we will ultimately incur. Furthermore, if any of our competitors develop similar or better data systems, adopt similar or better underwriting criteria and pricing models or receive our data, our competitive advantage could decline or be lost.lost, which could negatively impact our margins, customer retention, profitability and long-term growth.

Our ability to grow our business depends on retaining and expanding our member base. For the year ended December 31, 2024,2025, we generated approximately 67.0%69% of our revenue from our subscription business segment. In order to increase our membership, we must continue to generate leads and convince prospective members of the benefits of medical insurance for pets in general and our subscription business segment in particular. To maintain our existing member base, we need to continue to reinforce the value of our subscription among our members, prospective members, and veterinarians.

We utilize Territory Partners, who are paid fees based on enrollments and retention in their regions, to communicate the benefits of medical insurance to veterinarians through a combination of remote and in-person communications. WeVeterinarians alsothen investeducate inpet otherparents, third-partywho visit our website or call our contact center to learn more about these benefits, and direct-to-consumerpotentially memberbecome acquisitionmembers. channels.The Weefforts intend to maintainof our Territory PartnerPartners modelmay andnot structurebe andsuccessful wefor plana variety of reasons, including their ability to introduceeffectively other distribution channels to increase lead generation and to engage in other sales and promotional activities, including direct-to-consumer advertising, all of which are likely to increasecommunicate our acquisitionvalue costs. In addition, these go-to-market plans may face unexpected delays, costs or other challenges, such as decreased ability of Territory Partners to conduct in-person visitsproposition with veterinarians.

We have made and plan to continue to make substantial investments in features and enhanced functionalities for our website and support our contact center. These enhancements are designed to help appropriately direct pet ownerparent traffic to the enrollment journey of their choice, increase member engagement, and improve member service. These activities do not directly generate revenue, however, and we may never realize any benefit from these investments. If the expenses that we incur in connection with these activities do not result in sufficient growth in members to offset the cost, our business, operating results and financial condition will be adversely affected. Generally, we see greater conversion through our contact center and if we are unable to drive more potential members to call our contact center, our conversion rates may decline.

If we do not retain our existing members or if our marketing initiatives do not result in enrolling more pets or result in enrolling pets that inherently have a lower retention rate, we may not be able to maintain our retention and new pet acquisition rates. In the past, we have experienced reduced retention rates during periods of rapid member growth, as our retention rate generally has been lower during the first year of member enrollment. Members may choose to terminate their subscription for a variety of reasons, including, loss of a pet, increased subscription payments, perceived or actual lack of value, delays or other unsatisfactory experiences in how we review and process veterinary invoice payments, unsatisfactory member service, a change in the economic environment, a more attractive offer from a competitor, changes in our subscription or other reasons, including reasons that are outside of our control. Our cost of acquiring a new membermember, including sales and promotional activities, is substantially greater than the administrative cost involved in maintaining our relationship with an existing member. If we are not able to successfully retain existing members and limit cancellations, our revenue and operating margins will be adversely impacted and our business, operating results and financial condition would be harmed.

In order for us to continue to implement our business strategy and grow our revenue, we must effectively maintain and increasemanage the number and quality of our relationships with Territory Partners, veterinarians and veterinary affiliates, including veterinary purchasing groups and associations, existing members, complementary online and other businesses, animal shelters, breeders and other referral sources, and continue to scale and improve our processes, programs and procedures that support them. Those processes, programs and procedures could become increasingly complex and difficult to manage as we grow. We must also contract with Territory Partners across our target geographies and educate them on our value proposition, so they are more effective in generating leads. In addition, any changes in our industry or the regulatory framework in which we operate could adversely impact our business model, revenue growth, cost structure, and overall operational efficiency.

Veterinary leadsreferrals represent our largest member acquisition channel. We spend significant time and resources attracting qualified and engaging Territory Partners and providing them with current information about our business and they, in turn, communicate the benefits of medical insurance for pets to veterinarians. Identifying and engaging quality Territory Partners can be challenging and Territory Partners typically need months or years to build their business before they can generate meaningful income. In addition, our relationship with our Territory Partners may be terminated at any time (for instance, if they feel unsupported or undervalued by us), and, if terminated, we may not recoup the costs associated with educating them about our subscription products, and the relationships with veterinarians developed by that Territory Partner would be unsupported until such time a new Territory Partner is installed. Sometimes a single relationship may be used to cover multiple territories so that a terminated relationship with a Territory Partner could significantly affect our company. Further, if we experience an increase in the rate at which Territory Partner relationships are terminated, we may not develop or maintain relationships with veterinarians as quickly as we have in the past or need to in order to execute our business strategy and our growth and financial performance could be adversely affected.

Territory Partners are independent contractors and, accordingly, we do not directly provide the same direction, motivation and oversight over Territory Partners as we otherwise could if Territory Partners were our own employees. Further, Territory Partners may themselves employ or engage others; we refer to these partners and their associates, collectively, as our Territory Partners. We do not control a Territory Partner’s employment or engagement of others, and it is possible that their actions or the actions of their employees and/or contractors could create threatened or actual legal proceedings against us. Moreover, applicable law might prevent or limit our ability to subject our Territory Partners to non-compete obligations.obligations and similar restrictions in animal health channels. Similarly, Territory Partners may not require, or applicable law may not permit or may limit a Territory Partner’s ability to subject their employees or service providers to non-compete obligations.

Our insurance subsidiaries are required to maintain minimum levels of surplus capital to support our overall business operations in consideration of our size, scope, jurisdiction, and risk profile. We have in the past and may in the future fail to maintain the amount of risk-based capital required to avoid potentially costly additional regulatory oversight. We are also subject to contractual obligations related to reinsurance agreements with third parties (including Accelerant, who currentlycontinues underwritesto underwrite a minority-portion of our policies in Canada) which requiresrequire us to fund trust accounts to support the capital requirements of our insurance company partners.

We are and will continue to operate in a competitive market. The animal health industry is dynamic and evolving, and future changes could adversely affect us. In addition to pet parents self-financing their pets' medical care, there are traditional insurance companies that provide pet insurance products, either as a stand-alone product or along with a broad range of other insurance products, such as wellness. In addition, new entrants backed by large insurance companies have entered the pet medical insurance market in the past and more may do so in the future.future, particularly as the pet insurance category becomes more heavily penetrated. Further, traditional “pet insurance” providers may consolidate or take other actions to mimic the efficiencies from our vertically-integrated structure or create other operational efficiencies, which could lead to increased competition. The success of any of these competitors would, in time, affect our prospects, operating results and financial condition.

To compete effectively, we believe we will need to continue to invest significant resources in pet acquisition, improve our member service levels, enhance the online experience and functionalities of our website and in other technologies and infrastructure.infrastructure, including in our proprietary direct pay software. Failure to compete effectively against our current or future competitors could result in loss of current or potential members, which could adversely affect our pricing, lower our revenue, prevent us from maintaining profitability and diminish our brand strength.

We maintain a recorded reserve for veterinary invoices that is based on our best estimates of the amount of veterinary invoices we expect to pay, inclusive of an estimate for veterinary invoices we have not yet received, after considering internal factors, including data from our proprietary data analytics platform, experience with similar cases, actual veterinary invoices paid, historical trends involving veterinary invoice payment patterns, patterns of receipt of veterinary invoices, seasonality, pending levels of unpaid veterinary invoices, veterinary invoice processing programs and contractual terms. We may also consider external factors, including changes in the law, court decisions, changes to regulatory requirements and economic conditions. Because reserves are estimates of veterinary invoices that have been incurred but are not yet submitted to us, setting appropriate reserves is an inherently uncertain and complex process that involves significant subjective judgment. Further, in the United States, we do not transfer or cede our risk as an insurer and, therefore, we maintain more risk than we would if we purchased reinsurance.

Increases in the number and amount of veterinary invoices we receive could arise from unexpected or other events that are inherently difficult to predict or estimate, such as aillness pandemicor disease that spreads through the pet population, tainted pet food or supplies or an unusually high number of serious injuries or illnesses. We may experience volatility in the number of veterinary invoices we receive from time to time, and short-term trends may not continue over the longer term. The number or amount of veterinary invoices may be affected by the level of care and attentiveness an owner provides to the pet, the pet’s breed and age (at enrollment) and other factors outside of our control, as well as fluctuations in member retention rates and by new member initiatives that encourage an increase in veterinary invoices and other new member acquisition activities.

We have made, and expect to continue to make, substantial investments in equipment and related network infrastructure to handle the operational demands on our technology platform, including increasing data collection, software development, traffic on our website and the volume of calls at our contact center. The operation of the systems and infrastructure supporting our technology platform is expensive and complex and could experience operational failures. In the event that our data collection, member base or amount of traffic on these systems grows more quickly than anticipated, we may be required to incur significant additional costs to increase the capacity in our systems. Further, our development and implementation activities may not be successful, may not be well-received by veterinarians or by prospective or existing members, particularly if they are costly, cumbersome or unreliable, and we may incur delays or cost overruns or elect to curtail our currently planned expenditures related to them. Even if our system improvements are well-received, they may be or become obsolete due to regulatory or technological reasons or the availability of alternative solutions in the marketplace. If new solutions and enhancements are not successful on a long-term basis,basis or we are required to maintain legacy systems longer than anticipated, we may not realize benefits from these investments, and our business and financial condition could be adversely affected.

In addition, any system failure that causes an interruption in or decreases the responsiveness of our services could impair our revenue-generating capabilities, harm our business and operating results and damage our reputation. Any loss or mishandling of data could result in breach of confidence, competitive disadvantage or loss of members, and subject us to potential liability or regulatory action. Any failure of the systems and infrastructure that we rely on could negatively impact our enrollments as well as our relationship with members. If we do not maintain or expand the systems and infrastructure underlying our technology platform successfully, or if we experience operational failures, including those that may impact our proprietary direct pay software, our reputation could be harmed and we could lose current and potential members, which could harm our operating results and financial condition.

Computer viruses, hackers, employee misconduct, and other external hazards could expose our technology platformplatforms to security breaches, cyber-attacks or other disruptions. While we have implemented security measures designed to protect against breaches of security and other interference with our systems and networks, our systems and networks may be subject to breaches or interference and we, and our third-party service providers, will likely continue to experience cybersecurity incidents of varying degrees. Any such event may result in operational disruptions as well as unauthorized access to, the disclosure of, or loss of our proprietary information or our customers’ data and information, which in turn may result in legal claims, regulatory scrutiny and liability, reputational damage, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisors, or other damage to our business. In addition, the trend toward general public notification of such incidents could exacerbate the harm to our business, financial condition and results of operations. Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data, we could suffer harm to our business and reputation if attempted security breaches are publicized. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks and systems used in connection with our business.

WeOur dependbusiness inincreasingly partdepends on online technologies and platforms, including Internet searchaffiliate enginessites, partner channels, generative AI, and social media, to attract potential new members to visit our website.websites. IfAs Internetour searchdependency engines’on methodologiesthese online technologies and platforms increases and if the methods for members to obtain information about us are modified or our search result page rankings decline for other reasons,modified, our new member growth could decline, and our business and operating results could be harmed.

We endeavor to drive significant traffic to our website from consumers who search for pet medical insurance throughon the Internet. The online methods for obtaining information about us has changed over time from Internet search engines to other methods, including Internet affiliate sites, partner channels generative AI, such as Google, BingGrok and Yahoo!.ChatGPT, social media platforms, and other websites that provide articles, reviews, pricing or information about pet insurance. A critical factor in attracting consumers searching for pet medical insurance on the Internet to our websitewebsites is dependent on our online presence, including whether and how prominently we are prominently displayedappear in responsesearch toresults, Interneton searchesaggregator relatingsites, toin medicalnews articles and blogs and in social media posts about the pet insurance for pets. Algorithmic search result listings are determined and displayed in accordance with a set of formulas or algorithms developed by the particular Internet search engine, which may change from time to time, and paid search advertisements often receive the most prominent listing. Newer tools enhanced by artificial intelligence including large language models are swiftly changing the search and display landscape.industry. If we are listed less prominently in, or removeddo altogethernot from, search result listingsappear for any reason,reason in these online information sources, the traffic to our websites would decline and we may not be able to replace this traffic, which in turn would harm our business, operating results and financial condition. IfIn addition, if we attempt to replace this traffic, we may be required to increase our pet acquisition expenditures, including by utilizing paid search advertising. Certain of our competitors have spent additional funds to promote their products in search results over us. If we decide to respond by purchasing search advertising, our pet acquisition costs would increase which may harmadversely impact our business,business and operating results and financial condition.results.

In addition, we use artificial intelligence and machine learning to leverage data so we can automate the payment of veterinary invoices.invoices using machine learning. Although we intend to increase the percentage of veterinary invoices paid without human intervention and process veterinary invoices in seconds, our efforts may be unsuccessful for a number of reasons. The data we gather is extensive, and the development, maintenance and operation of our data analytics engine is novel, expensive and complex. We may face unforeseen difficulties, including material performance problems, undetected defects or technical obstacles, for example, with new capabilities incorporating machine learning. If such problems, defects, or obstacles prevent our proprietary algorithms from operating properly, we may incorrectly pay or deny claims made by our customers. Such errors could result in existing customersmembers canceling their policies, prospective customersmembers declining to purchase our subscription, or improper payments that reduce our resources. Additionally, our artificial intelligence and machine learning algorithms may lead to unintentional bias or discrimination, which could subject us to legal or regulatory liability that has a material and adverse effect on our business, results of operations and financial condition.

State legislatures and insurance regulators have shown interest in insurance companies' use of external data and artificial intelligence in insurance practices, including underwriting, marketingmarketing, communicating with customers and prospects, and claims practices. The NAIC has adopted Artificial Intelligence Principles in August 2020.Principles. In addition, a number of states have had legislative or regulatory initiatives relating to the use of external data and artificial intelligence in the insurance industry, such as bulletins issued by the California and Connecticut Departments of Insurance advising insurers of their obligations related to unfair discrimination when using data and artificial intelligence. There is also increasing focus on regulating the use of artificial intelligence and machine learning in Europe such as the proposal by the European Commission for regulation on artificial intelligence using a comprehensive risk-based governance framework. Increased focus on regulation in the United States and foreign jurisdictions could subject us to legal or regulatory liability that has a material and adverse effect on our business, results of operations and financial condition.

We believe that maintaining and enhancing our brand recognition and reputation is critical to our relationships with existing members, Territory Partners, veterinarians and others, and to our ability to attract new members, new Territory Partners, and additional supportive veterinarians.veterinarians and their teams. We also believe that the importance of our brand recognition and reputation will continue to increase as competition in our market continues to develop and mature. Our success in this area will depend on a wide range of factors, some of which are out of our control, including the following:

The promotion of our brand will requirerequires us to make substantial investments, and we anticipate that, as our market becomes increasingly competitive, these branding initiatives may become increasingly difficult and expensive. Our brand promotion activities may not be successful or yield increased revenue, and to the extent that these activities result in increased revenue, the increased revenue may not offset the expenses we incur and our operating results could be harmed. If we do not successfully maintain and enhance our brand, our business may not grow which would harm our operating results and financial condition.

Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on the internal control over financial reporting, which must be attested to by our independent registered public accounting firm. We have in the past,past andidentified maymaterial weaknesses or significant deficiencies in our internal control over financial reporting, which have been remediated. We may, in the futurefuture, identify material weaknesses or significant deficiencies in our internal control over financial reporting, which may result in us not detecting material errors in our financial statements on a timely basis. If we, or our independent registered public accounting firm, identify future material weaknesses in our internal control over financial reporting, we are unable to comply with the requirements of Section 404 in a timely manner, we are unable to assert that our internal control over financial reporting is effective or our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected. We could also become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

In order to successfully expand our business, we need to hire, integrate and retain in-demand highly skilled and motivated employees and continue to improve our existing systems for operationaloperational, data and financial management. These improvements could require significant ongoing capital expenditures and continue to place increasing demands on our management. If we do not successfully implement improvements in these areas, our business, operating results and financial condition will be harmed.

We have in the past created, invested in or acquired complementary businesses, products, technologies and new lines of business, and we may continue to do so in the future. Our ability to successfully evaluate and manage investment opportunities, or make and integrate acquisitions or products, is unproven. For example, we have invested in a pet food initiative, and we believe that pet food maywill be an important part of our offerings over the long term. We dohave notnot, havehistorically, had experience manufacturing, selling, or distributing food products and pet food manufacturing facilities and pet food products are subject to many laws and regulations administered by the United States Department of Agriculture, the Federal Food and Drug Administration, the Occupational Safety and Health Administration, and other federal, state, local, and foreign governmental agencies relating to the production, packaging, labelling, storage, distribution, quality, and safety of food products and the health and safety of employees. We have also acquired technology intended to enable us to improve our back-end software and facilitate certain expansion efforts, but technology integration is complicated, expensive and time consuming, and it may not result in us realizing the intended benefits from the acquisition.

We have developed, maintain, and in the future may seek new strategic relationships with various third parties. For these efforts to be successful, we must negotiate and enter into agreements with these third parties on terms that are attractive to us, and then successfully implement the arrangement, which requires integrating and coordinating their resources and capabilities with our own, which may present challenges relating to technology integration, marketing, branding, regulatory matters, customer support, and other operational matters. These relationships may require several years to implement, may face delays or terminations, and may not be successfully implemented at all. We may be unsuccessful in entering into agreements with acceptable third parties, negotiating favorable terms in these agreements, or achieving the anticipated results over our desired time horizon.horizon or at all. In addition, some of our historical strategic relationships have required us to agree to exclusivity, and or other terms that may limit our ability to pursue opportunities we might otherwise pursue. In connection with our strategic relationships, we have in the past and may in the future provide equity consideration, impose contractual holding periods for such securities, impose standstill obligations or include other requirements that terminate in the event the strategic relationship ceases, which may have an adverse effect on our stock price and otherwise cause our business to suffer.

•negative publicity and other issues faced by our strategic partners could adversely impact us.us, including by harming our brand and reputation.

Our other business segment includes revenues and expenses related to underwriting policies on behalf of third parties that do not carry reference to the Trupanion brand. In the past, our other business segment involved numerous third parties to varying extent, but in recent years this segment has consisted almost entirely of business with Pets Best, a third-party managing general agent. For the year ended December 31, 2024,2025, premiums from policies written for Pets Best, pursuant to our agreements with them, accounted for 32%30% of our total revenue. Our Pets Best business historically has had, and we expect it to continue to have, significantly lower margins than our subscription business. The contractual relationship with Pets Best and other third parties may be terminated by either party, and the third party may choose to be in a relationship with a different underwriter, including one of our competitors. In administering or marketing a product to consumers, if one of these unaffiliated third parties make an operating decision that adversely affects its business or brand, our business or brand could also be adversely impacted. Further, we rely on the timely dissemination of financial information from these third parties to compile our own financial statements. Failure to receive this information timely, or failure to receive complete and accurate information, could negatively impact our ability to meet regulatory filing requirements, including the filing of our annual audited financial statements.

We and Pets Best have agreed to roll off a portion of our business together, as Pets Best ramps up policies written by anotherother insurer.insurers. We do not control the timing or extent of this roll off and, accordingly, it may not proceed as we expect, which could cause our results to fluctuate or have other unexpected impacts on our business. Our Pets Best business historically has had, and we expect it to continue to have, significantly lower margins than our subscription business. During the roll-off of Pets Best, administration of this business and any similar business in the future may divert our time and attention away from our subscription business segment, which could adversely affect our operating results in the aggregate. Further, the roll-off is expected to result, over time, in significantly reduced premiums (and associated expense) in our other business segment. This reduced revenue stream will reduce the diversification of our premium base and make us more dependent on the success of our subscription business segment, at least in the short term. Further, the reduction of this business could have a material adverse impact on our operating results, financial condition, and stock price.

InAlthough Canada,we have transitioned most of our insuranceCanadian policies areto currentlyGPIC, our wholly-owned subsidiary, a portion of our business is still written bythrough Accelerant. Under our arrangement with Accelerant, and we assumehave assumed all premiums written by Accelerant and the related veterinary invoice expense through an agency agreement and a fronting and administration agreement. In advance of the termination of our agreement with Accelerant, which is currently scheduled for December 31, 2025, we plan to transition policies from Accelerant to our wholly owned subsidiary, GPIC. In addition, we expect to begin underwriting new business through GPIC during 2025. GPIC has limited operating history, and theas transitionit of this business will be complicated and involve regulatory, operational and contractual challenges. As GPIC beginscontinues underwriting policies, we will face risks and uncertainties similar to those faced by our United States insurance company APIC. As a relatively new underwriting entity, GPIC may face undue scrutiny from regulators, which may affect its financial position and may require a disproportionate amount of internal administrative resources. With respect to the continued transition itself, we may encounter regulatory delay and challenges, face operational and information technology issues that are new to us, and create confusion for our members. In addition, we may be required to contribute more risk-based capital into GPIC, potentially over a short time frame as our underwritten premiums grow at a rapid pace. We expect to work with Accelerant to make this transition as smooth as possible for our members, our company, and Accelerant, but there is no guarantee that these risks will not materially impact the transition. If we face timing constraints with our transition, we may discuss with Accelerant whether we should continue the underwriting relationship in some fashion; or we may need to seek other underwriting capacity.

We have expanded, and seek to further expand, ourinternational operations internationally, and are subject to a number of risks associated with international expansion and operations.

We have developed and seek to expand our operations internationally and expectwe tomay in the future continue exploring opportunities outside of North America. For instance, in Augustthe 2022geographies where we purchaseddo Smartnot Paws,currently anoperate. MGACurrently, forwe have pet insurance with operations basedsubsidiaries in GermanyEurope andthat operate in Germany, Switzerland, and in November 2022 we acquired PetExpert, an MGA for pet insurance with operations based inBelgium, the Czech Republic and Slovakia. We have limited history of marketing, selling, administering and supporting our subscription product for consumers outsidein of the North America.Europe. In general, international sales and operations may be subject to a number of risks, including the following:

•regulatory rules and practices, including robust privacy regulations, foreign exchange controls, tariffs, tax laws and treaties that are different than those in North America where we primarily operate under currently;

These and other factors could harm our ability to gain future international revenue and increase our expenses, which would materially impact our business and operating results. The expansion of our existing international operations and any entry into additional international markets willcould require significant management attention and financial resources, which may detract from management attention and financial resources otherwise available to our existing business. Our failure to successfully manage our international operations and the associated risks effectively could limit the future growth of our business and could have an adverse effect on our operating results and financial condition.

Our international operations expose us to the risk of changes in currency exchange rates, particularly with respect to our Canada operations. For the year ended December 31, 2024,2025, approximately 16% of our total revenue was generated in Canada.Canada, Whileand Europeapproximately currently1% doesof notour presentrevenue materialwas incomegenerated statementin exposure to exchange rates, that may not continue.Europe. Fluctuations in the relative strength of the USU.S. dollar compared to the currencies of other jurisdictions in which we operate has in the past and could in the future adversely affect our revenue and operating results. Moreover, in the future, we may continue to expand the number of countries in which we offer products and operate and this could increase our exposure to currency exchange rate fluctuations.

We currently own one United Stateshave insurance companysubsidiaries throughin whichthe weU.S. and Canada. Our two primary insurance subsidiaries in the U.S. are issuing products - APIC, a New York domiciled insurer. We also own and have regulatory approvals for a U.S. insurer domiciled in MissouriNew calledYork, ZPIC.and WeZPIC, aredomiciled currentlyin pursuing so-called expansion applications to allow ZPIC to write business similar to that underwritten by APIC.Missouri. In Canada, asour mentionedwholly-owned above,insurance subsidiary, GPIC, underwrites most of our Canadian business. Over time, we are planning to underwrite significant business previously underwritten by Accelerant through GPIC. We may also seek to acquire or establish other insurers,insurance subsidiaries, including to support our operations in certain countries in Continental Europe.

Acquisitions and operations of these insurers presentspresent a number of risks, including the following:

In addition, cyber-attacks or acts of terrorism could cause disruptions in our business or the economy as a whole. Our servers and systems may also be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays, loss of critical data or the unauthorized disclosure of confidential member data. WeIn currentlythe haveevent limitedof any disruption to our business, our preparations and plans to address any such disruption may be inadequate or ineffective. Our disaster recovery capability,may be insufficient or inappropriate, and our business interruption insurance may be insufficient to compensate us for losses that may occur. Such disruptions could negatively impact our ability to run our business, which could have an adverse effect on our reputation, operating results and financial condition.

We accept subscription payments from our members through automatic fund transfers and paymentstransfers, via credit and debit cardcard, and mobile payment applications. For payments via credit and debit card and mobile payment applications, we pay interchange and other fees, which may increase over time. An increase in the number of members who utilize credit and debit cards and mobile apps to make their subscription payments or an increase in related credit and debit card fees would reduce our margins and could require us to increase our fees, which could cause us to lose members and revenue, or suffer an increase in our operating expenses, either of which could adversely affect our operating results.

If we, or any of our processing vendors or banks have problems with our third-party billing software, or if the billing software malfunctions, it could have an adverse effect on our member satisfaction and new member growth and could cause one or more of the major credit card companies or banks to disallow our continued use of their payment products. In addition, if our billing software fails to work properly and, as a result, we do not automatically charge our members’ credit cards on a timely basis or at all, or a bank withdraws the incorrect amount or fails to timely transfer the correct amount to us, we could lose revenue and harm our member experience, which could adversely affect our business and operating results. Moreover, aany vendorof our third-party billing providers could fail to process payments, or could process payments in the wrong amounts, which could result in us failing to collect premiums, could result in increased cancellations and could adversely affect our reputation.

We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, including the Payment Card Industry Data Security Standard ("PCI DSS"), a security standard applicable to companies that collect, store or transmit certain data regarding credit and debit cards, holders and transactions. We are currently compliant with PCI DSS in North America but our internal compliance efforts are ongoing with respect to acquired businesses. We may not be fully or materially compliant with PCI DSS, or other payment card operating rules in the future. Any failure to comply with the PCI DSS in the future may violate payment card association operating rules, federal and state laws and regulations, and the terms of our contracts with payment processors and merchant banks. Such failure to comply may subject us to fines, penalties, damages and civil liability, and may result in the loss of our ability to accept credit and debit card payments. In addition, there is no guarantee that PCI DSS compliance will prevent illegal or improper use of our payment systems or the theft, loss or misuse of data pertaining to credit and debit cards, credit and debit card holders and credit and debit card transactions.

We own our headquarters office building in Seattle, Washington, USA.and lease a portion of the building to third parties. Our financial condition and cash flow could be materially affected by changes in costs associated with maintaining the building and ensuring it is suitable for our use and that of other tenants and maintain compliance with all environmental and other regulations applicable to ownership of real estate. Failure to attract and retain tenants for our unused space will result in our not receiving rental income and could also cause a reduction in the value of the building. Managing tenants, maintaining the building, and otherwise facing the costs and responsibilities of being the owner of a building may be a distraction from our core business and cause our performance to suffer. We are also exposed to and potential third-party liability as the owner of our office building, such as if an accident occurs on the premises.

We provide medical insurance for cats and dogs in the United States, Canada, and certain countries in Continental Europe, and Australia.Europe. Through our data-driven, vertically-integrated approach, we develop and offer high valuehigh-value medical insurance products, priced specificallyto fortake into account each pet’s unique characteristics and coverage level. Our growing and loyal membership base provides us with highly predictable and recurring revenue.

We operate in two reporting segments: subscription business and other business. We generate revenue in our subscription business segment primarily through insurance premiums, which we refer to as subscription payments from direct-to-consumer products. We operate our subscription business segment similar to other subscription-based businesses, with a focus on achieving a target margin prior to our new pet acquisition expense and acquiring as many pets as possible at our targeted average estimated internal rate of return. Within our subscription business, we also provide "Powered by Trupanion" pet insurance product offerings marketed by third parties, low and medium average revenue per pet products marketed under the brand names Furkin and PHI Direct in Canada, and a Trupanion branded product in Germany and Switzerland. We either directly underwrite or assume full insurance risk for these products through reinsurance arrangements. We provide a full suite of services and support for these products and they are designed to align with the target margin profile of our subscription business segment. Within this segment, we also offer products in certain countries in Continental Europe, which are currently underwritten by third parties who pay us commissions that we recognize as revenue. Going forward our intent is to assume full insurance risk for these products, either through direct underwriting or reinsurance arrangements.

We generate leads for our subscription business segment from a diverse set of member acquisition channels, which we then seek to convert into members through our contact center, website and other direct-to-consumer activities. These channels include leadsreferrals from third-parties such as veterinarians and referrals from existing members. Veterinary hospitals represent our largest referral source. Our “Territory Partners” travelcreate relationships with veterinary hospital teams through their territories to have face-to-face visits with veterinarians and their staff.visits. Territory Partners are dedicated to cultivating direct veterinary relationships and helping those veterinarians understand the benefits of high-quality medical insurance. Veterinarians then educate pet parents, who visit our website or call our contact center to learn more about, and potentially enroll in, a Trupanion product. We also receive a significant number of new leads from existing members adding pets and referring their friends and family members. Our direct-to-consumer acquisition channels serve as important resources for pet ownerparent education and drive new member leads and conversion. We monitor average pet acquisition cost to evaluate the efficiency in acquiring new members and measure effectiveness based on our targeted return on investment.

Our other business segment is comprised ofgenerates revenue from other product offerings, withprimarily by underwriting policies on behalf of third parties with whom we generally have a business-to-business relationship. This business segment has, and targets, a significantly lower margin profile than our subscription business segment and is not part of our core business strategy. The largest source of revenue within this segment is from our long-standing contractual relationship withas an underwriter for Pets Best, a third-party partnerinsurance provider we have worked with since 2015. We expect that enrollment from Pets Best will continue to decline as it engages other third-party underwriters. Additional products in this segment include the U.S. Department of Veterans Affairs program and employer-sponsored programs, primarily for companies with animal health related operations.

Total pets enrolled. Total pets enrolled reflects the number of pets enrolled in one of the insurance products offered in our subscription business segment andor our other business segment at the end of each period presented. We monitor total pets enrolled because it provides an indication of the growth of our consolidated business.

Total subscription pets enrolled. Total subscription pets enrolled reflects the number of pets enrolled in activeone membershipsof the insurance products offered in our subscription business segment at the end of each period presented. We monitor total subscription pets enrolled because it provides an indication of the growth of our subscription business. Because our subscription business has a significantly higher margin profile than our other business, changes in the rate of growth of our subscription pet enrollment tend to have a greater impact on our consolidated performance.

Average pet acquisition cost. Average pet acquisition cost ("PAC") is calculated as net acquisition cost divided by the total number of new subscription pets enrolled in that period. Net acquisition cost, a non-GAAP financial measure, is calculated in a reporting period as new pet acquisition expense, excluding stock-based compensation expense, other business segment expense, offset by sign-up fee revenue. We exclude stock-based compensation expense because the amount varies from period to period based on number of awards issued and market-based valuation inputs. We offset sign-up fee revenue because it is a one-time charge to some new members collected at the time of enrollment used to partially offset initial setup costs, which are included in new pet acquisition expenses. We exclude other business segment pet acquisition expense because that does not relate to subscription enrollments. We monitor average pet acquisition cost to evaluate the efficiency in acquiring new members and measure effectiveness based on our targeted return on investment.

The following tables present the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for years ended December 31, 2025, 2024 and 2023, and for each of the periodslast presentedeight fiscal quarters (in thousandsthousands, except percentages):.

When determining our PAC, we calculate net acquisition cost for a more comparable metric across periods. Net acquisition cost, a non-GAAP financial measure, is calculated in a reporting period as GAAP new pet acquisition expense, excluding stock-based compensation expense, other business segment expense, and pet acquisition expense for commission-based policies, offset by sign-up fee revenue. We exclude stock-based compensation expense because the amount varies from period to period based on the number of awards issued and market-based valuation inputs. We exclude other business segment pet acquisition expense because it does not relate to subscription enrollments. We exclude pet acquisition expense for commission-based policies because the revenue of these products is earned from commissions from a third-party underwriter, as opposed to the subscription payments earned by the remainder of our subscription business. We offset sign-up fee revenue because it is a one-time charge to some new members collected at the time of enrollment used to partially offset initial setup costs, which are included in new pet acquisition expenses.

We operate in two reporting segments: subscription business and other business. We generate revenue in our subscription business segment primarily by subscription payments from direct-to-consumer products. We operate our subscription business segment similar to other subscription-based businesses, with a focus on achieving a target margin prior to our pet acquisition expense and acquiring as many pets as possible at our targeted average estimated internal rate of return. Within our subscription business, we also currently provide "Powered by Trupanion" pet insurance product offerings marketed by third parties, low and medium average revenue per pet products marketed under the brand names Furkin and PHI Direct in Canada, and a Trupanion branded product in Germany and Switzerland. We either directly underwrite or assume full insurance risk for these products through reinsurance arrangements. We provide a full suite of services and support for these products and they are designed to align with the target margin profile of our subscription business segment. Within our subscription businessthis segment we also offer products in certain countries in Continental Europe, which are currently underwritten by third parties who pay us commissions that we recognize as revenue.

Our other business segment is comprised ofgenerates revenue from other product offeringsofferings, withprimarily by underwriting policies on behalf of third parties with whom we generally have a business-to-business relationship. This business segment has,has and targets, a differentsignificantly lower margin profile than our subscription business segment and includesis revenuenot from writing policies on behalfpart of thirdour partiescore andbusiness revenue from other pet insurance products.strategy. The largest source of revenue within this segment is from our long-standing contractual relationship with Pets Best, a third-partnerthird party insurance provider we have worked with since 2015. Additional products in this segment include the U.S. Department of Veterans Affairs program and employer-sponsored programs.programs, primarily for companies with animal health related operations.

We generate revenue in our subscription business segment primarily from subscription payments for our pet medical insurance. Subscription payments are paid at the beginning of each subscription period. In most cases, our members authorize us to directly charge their credit card, debit card or bank account through automatic funds transfer. Subscription revenue is recognized on a pro rata basis over the policy term. Membership may be canceled at any time without penalty, and we issue a refund for the unused portion of the canceled membership. In addition to subscription payments, we generate a small amount of revenue from charging a one-time sign-up fee to new members collected at the time of new enrollment to partially offset initial setup costs. Sign-up fees are related to Trupanion’s obligation to provide insurance coverage and are recognized over the policy term. We also generate a portion of our subscription business segment revenue through commissions earned in ourcertain European markets, where policies are currently underwritten by third parties and Trupanion is acting as an insurance broker.

We generate revenue in our other business segment primarily from writing policies on behalf of third parties where we do not undertake the direct consumer marketing. This segment also includes revenue from other pet insurance products that have a differentsignificantly lower margin profile from our subscription business.

Veterinary invoice expense includes our costs to review and pay veterinary invoices, administer the payments, and provide member services, and other operating expenses directly or indirectly related to the claimsthis process. We also accrue for veterinary invoices that have been incurred but not yet received and for the estimated internal costs of processing those invoices. This also includes amounts paid by unaffiliated general agents on our behalf, and an estimate of amounts incurred and not yet paid for our other business segment.

Other cost of revenue for the subscription business segment includes direct and indirect member service expenses, Territory Partner feescommissions uponper policymember renewals,renewal, payment processing fees and premium tax expenses. Other cost of revenue for the other business segment includes the commissions we pay to unaffiliated general agents, costs to administer the programs in the other business segment and premium taxes on the sales in this segment.

Technology and development expenses primarily consist of personnel costs and related expenses for our technology staff, which includes information technology developmentdevelopment, andsecurity, infrastructure support, includingand third-party services. It also includes expenses associated with development in new geographies and new products and offerings.

New pet acquisition expenses primarily consist of costs,costs to acquire a pet (including costs associated directly to supporting the first year of a member), personnel costs, costs to educate veterinarians and consumers about the benefits of Trupanion, costs to generate leads and to convert leads into enrolled pets, as well as print, online and promotional advertising costs.

Gain (loss) from investment in joint venture consists of the share of income and losses from our equity method investment in a joint venture,venture in Australia, as well as income and expenses associated with administrative services provided to the joint venture. In March 2025, we restructured this relationship from a joint venture to a brand license and services arrangement.

Year ended December 31, 20242025 compared to year ended December 31, 2023.2024. Total revenue increased by $177.1$153.6 million, or 16%,12%, to $1,285.7$1,439.3 million for the yeartwelve months ended December 31, 2024.2025. Revenue from our subscription business segment increased by $143.6$132.8 million, or 20%,16%, to $856.5$989.3 million for the yeartwelve months ended December 31, 2024.2025. This increase was primarily due to aan 12%11% increase in monthly average revenue per pet and an increase in subscription pet months (the sum of pets enrolled for each month during a period) for policies underwritten by Trupanion. Our subscription pets enrolled increased by 54,961 pets, or 5%, to 1,096,137 for the twelve months ended at December 31, 2025, which was consistent with the growth rate of pets enrolled in the prior year period. Revenue from our other business segment increased by $33.5$20.8 million, or 8%,5%, to $429.2$450 million for the yeartwelve months ended December 31, 2024.2025. This increase was primarily driven by a 17%20% increase in monthly average revenue per pet in this segment, partially offset by a decrease in pet months in this segment primarily reflecting the expected run offrun-off of pets we historically insured for aPets third-party.Best.

Year ended December 31, 20242025 compared to year ended December 31, 2023.2024. Total cost of revenue for our subscription business segment increased $93.2by $84.0 million, or 15%,12%, to $706.9$790.9 millionmillion, for the yeartwelve months ended December 31, 2024.2025. This increase was driven by a $81.2$75.7 million, or 15%,12%, increase in veterinary invoice expense and aan $11.9$8.3 million, or 17%,10%, increase in other cost of revenue. The 15%12% increase in veterinary invoice expense was primarily driven by an 8% increase in veterinary invoice expense per pet and an increase in total subscription pet months for policies underwritten by Trupanion and a 7% increase in veterinary invoice expense per pet.Trupanion. The 17%10% increase in other cost of revenue was primarily drivendue byto general increases in costs attributable to growth in our membership and subscription revenue. Subscription business total cost of revenue decreased from 86%83% to 83%80% of revenue year-over-year.year-over-year Theprimarily primarydue driversto of this margin improvement were our ongoing pricing actions and continued efficiency gaingrowth in oursubscription costrevenue ofoutpacing processinggrowth claims.in subscription veterinary invoice expense.

Total cost of revenue for our other business segment increased by $36.1$17.4 million, or 10%,4%, to $400.0$417.4 million for the yeartwelve months ended December 31, 2024.2025. TheThis increase was primarily driven by a $36.9$4.1 million, or 13%,1%, increase in veterinary invoice expense,expense partially offset byand a $0.7$13.3 million, or 1%,18% decreaseincrease in other cost of revenue. The 13%1% increase in veterinary invoice expense was primarily driven by a 21%16% increase in veterinary invoice expense per pet, partially offset by a decrease in pet months in this segment primarily reflecting the expected run offrun-off of pets we historically insured for aPets third-party.Best. TheWithin 1%our decreaseother business segment, fluctuations in other cost of revenue wasare primarilylargely driven by decreasestrends in premium-basedrevenue expenses.and Costveterinary invoice expense. Total cost of revenue for the other business segment increaseddecreased from 92%94% to 93% of revenue year-over-year.

Year ended December 31, 20242025 compared to year ended December 31, 2023.2024. Technology and development expenses increased by $9.9$6.6 million, or 46%,21%, to $31.3$37.8 million for the yeartwelve months ended December 31, 2024.2025. This increase was primarily due a $6.8 million reduction in capitalized expenditures related to internally-developed software projects launched in early 2024, a $1.0$4.7 million increase in general compensation and other employee-related expenses, a $1.3 million reduction in capitalized expenditures related to internally developed software projects, and a $0.7 million increase in infrastructure-relatednew expenses,product exploration and an increase of $0.8 million in development expense.expenses. Technology and development expenses remainedincreased constant atfrom 2% to 3% of total revenue year over year.year-over-year.

Year ended December 31, 20242025 compared to year ended December 31, 2023.2024. General and administrative expenses increased by $3.5$12.9 million, or 6%,20%, to $63.7$76.6 million for the yeartwelve months ended December 31, 2024.2025. This increase was driven by increases of $6.6$12.1 million in general compensation and other employee-related expenses, $2.7 million in professional services,expenses and $2.3$1.9 million in underwriting fees related to our Canadian business.business, These increases werepartially offset by twoa charges$0.8 that were recorded during the first quarter of 2023 that led to amillion decrease in expenseprofessional when comparing periods, a $4.8 million stock-based compensation charge following certain executive departuresservices and a $3.8$0.3 million charge related to a negotiated settlement of uncollected premiumsdecrease in connection with the transition of underwriting a third-party business to other insurers.miscellaneous expenses. General and administrative expenseexpenses remained constant at 5% of total revenue year-over-year.

Year ended December 31, 20242025 compared to year ended December 31, 2023.2024. New pet acquisition expenseexpenses decreasedincreased by $6.0$14.0 million, or 8%,20%, to $71.4$85.4 million for the yeartwelve months ended December 31, 2024.2025. This decreaseincrease was primarily duedriven toby aincreased decreasemarketing in expenses related to generating leads and driving conversion, particularly in the first half of 2024,spend as we focusedhave onbegun growthdeploying more capital to acquire new pets in oura moredisciplined efficient channels.manner. New pet acquisition expense as a percentage of revenue wasremained constant at 6% for the year ended December 31, 2024 compared to 7% in the same period last year, as we were able to stay disciplined with our discretionary pet acquisition spend, while still managing to grow total enrolled subscription pets, excluding those related to managing general agent policies, by 5%.spend.

Year ended December 31, 20242025 compared to year ended December 31, 2023.2024. Depreciation and amortization expense increaseddecreased by $4.0$0.6 million, or 32%,4%, to $16.5$15.8 million for the yeartwelve months ended December 31, 20242025, primarily driven by an increase in in-servicefewer internally developed software projects placed in-service during the period.

Year ended December 31, 20242025 compared to year ended December 31, 2023.2024. Total other expense(income) decreasedexpense, net increased by $4.3$8.3 million from expense of $0.1 million to $0.1income of $8.2 million for the yeartwelve months ended December 31, 20242025, primarily due to ana increase$7.8 inmillion interestrealized incomegain fromon the nonmonetary exchange of our investments partially offset by an increase in interest expense. Additionally, in 2023 total other expense included a credit loss of $1.7 million related to ourBaystride preferred stock investment infor Baystride,intellectual Inc.property Thisdeveloped lossby was subsequently determined to be recovered,Baystride and wasa reversed$0.7 throughmillion otherdecrease expensein duringinterest the year ended December 31, 2024.expense.

Year ended December 31, 20242025 compared to year ended December 31, 2023.2024. Stock-based compensation is included in the cost and expense line items in the consolidated statements of operations, discussed above. Stock-based compensation expense inincreased total wasfrom $33.4 million to $38.3 million for the yeartwelve months ended December 31, 2024, an increase from $33.2 million in the prior year period.2025. The amount of stock-based compensation recognized largely reflects the timing and vesting of our annual performance grants, calculated according to our equity incentive plan. Additionally, the year ended December 31, 2023, included $4.8 million in stock-based compensation as a result of charges taken after certain executive departures.

Our primary requirements for liquidity are paying veterinary invoices, funding and growing our operations, funding our capital requirements, investing in new member acquisition, investing in enhancements to our member experience, and servicing debt. We have certain contractual obligations in the normal course of business, including obligations and commitments relating to our Creditcredit Facility,arrangements, non-cancellable vendor purchase agreements, as well as future payments of veterinary invoices. Refer to Note 9, Reserve for Veterinary Invoices, included in Item 8 of Part II of this 10-K, for further details on anticipated cash outflows.

Most recently, our primary sourcessource of liquidity havehas been cash provided by operations and available borrowings from our Credit Facility.operations. We believe theseour sourcesoperating arecash flow is sufficient to fund our operations and capital requirements for the next 12 months. As we continue to grow and consider strategic opportunities, however, we may explore additional financing to fund our operations and growth or for strategic purposes. Financing could include equity, equity-linked, or debt financing. Additional financing may not be available to us on acceptable terms, or at all. If our capital surplus grows relative to the rate of growth of our business, we may also generate cash for operations and growth, via dividends or other methods, from one or more of our underwriting entities.

As of December 31, 2024,2025, we had $307.4$370.7 million in cash, cash equivalents and short-term investments, of which $272.0$320.7 million was held by our insurance entities. Outside of insurance entities, we held $35.4$50.0 million in cash, cash equivalents and short-term investments with an additional $15.0$5.0 million available under our CreditPNC Facility. Our insurance entities maintained $288.0 million of capital surplus. The ability to distribute any portion of this capital surplus to our parent company, and the timing of any distribution, may be subject to regulatory limitations and may be delayed or limited from time to time.

Net cash provided by operating activities was $89.5 million for the year ended December 31, 2025, compared to $48.3 million for the year ended December 31, 2024, compared to $18.6 million net cash provided by operating activities for the year ended December 31, 2023.2024. This increase was primarily driven by improved operating results largely driven by higher revenue and improved Subscription Business margins,margins offset byand timing differences in other working capital activities. Changes in accounts receivable and deferred revenue were primarily related to annual policies with annual payment terms within our otherOther businessBusiness segment. Changes in our reserve for veterinary invoices are driven by multiple factors, including ongoing analysis of claims frequency and severityseverity. as well asAdditionally, changes in claimsour inventoryaccounts atpayable, periodaccrued end.liabilities, and other liabilities are primarily due to differences in timing of payments.

Our Prior Credit Facility providesprovided us with up to $150.0 million of credit.credit, As of December 31, 2024,and we issuedhad outstanding term loans totaling $135.0$116.2 million prior to repayment. In November 2025, we repaid all amounts under the Credit Facility. ThePrior Credit Facility isutilizing securedproceeds by substantially all offrom our assetsnew andPNC those of our subsidiaries. Refer to Note 10, Debt, included in Item 8 of this report, for further details.facility.

As of December 31, 2024,2025, our insurance entities collectively held $125.5$88.1 million in cash and cash equivalents, to be used for operating expenses of our insurance entities, $146.4$232.6 million in short-term investments and $270.2$299.6 million in other current assets. MostIn addition to minimum capital requirements the majority of the assets in our insurance entities are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate.

WICL is domiciled in Bermuda and regulated by the Bermuda Monetary Authority ("BMA"). WICL Segregated Account AX was established by WICL, with Trupanion, Inc. as the shareholder, to enter into a reinsurance agreement with Accelerant Insurancefor Companyour ofbusiness Canada,activity formerlyin known as Omega General Insurance Company.Canada. All of the assets and liabilities of WICL Segregated Account AX are legally segregated from other assets and liabilities within WICL, and all shares of the segregated account are owned by Trupanion, Inc. InTrupanion, April 2024, our parent companyInc. received a dividenddividends of $8.6$15.6 million, $7.0 million, and $5.3 million from WICL Segregated Account AX in March, July, and November 2025, respectively, as permitted under our agreements with WICL. As required by the Office of the Superintendent of Financial InstitutionsOSFI regulations related to our reinsurance agreement with Accelerant Insurance Company of Canada,Accelerant, we are required to maintain a Canadian Reinsurance Trust account with the greater of CAD $2.0 million or 120% of unearned Canadian premium plus 20% of outstanding Canadian claims, including all incurred but not reported claims. As of December 31, 2024,2025, the account held CAD $19.9$8.7 million.million which we expect will continue to decrease as we rollover our Canadian book of business to GPIC.

We enter into long-term contractual obligations and commitments in the normal course of business, consisting primarily of debt obligations and non-cancellable vendor service agreements. In MarchNovember 2022,2025, we entered into athe creditPNC agreementAgreement, thatwhich provides us with up to $150.0$120.0 million of credit, including a $60.0$100.0 million initial term loan thatand was$20.0 fundedmillion revolving loan facility. We used the proceeds under the PNC Agreement to repay all amounts due and outstanding under our Prior Credit Facility. The PNC Agreement will require us to repay the underlying obligations over a three-year term at closingSOFR andplus ana aggregate $75.0 million of delayed draw term loans funded between December 2022 and September 2023.margin. Refer to Note 10,11, Debt, included in Item 8 of Part II of this report,report for further details,details regarding the credit agreements, including interest and future principal repayments.

Our business, results of operations, and financial conditions are subject to various risks as described in our Annual Report on Form 10-K. There have been no material changes to the risk factors identified in our Annual Report on Form 10-K.10-K, except as set forth below.

Our other business segment generates revenue from other product offerings, primarily by underwriting policies on behalf of third parties with whom we generally have a business-to-business relationship. This business segment has, and targets, a significantly lower margin profile than our subscription business segment and is not part of our core business strategy. The largest source of revenue within this segment is from our long-standing contractual relationship as an underwriter for Pets Best, a third-party insurance provider we have worked with since 2015. We and Pets Best have agreed to end our relationship after the third quarter of 2028. We expect that enrollment from Pets Best will continue to decline as it rolls off business and engages other third-party underwriters. Additional products in this segment include the U.S. Department of Veterans Affairs program and employer-sponsored programs, primarily for companies with animal health related operations.

The following table sets forth total enrolled pets in our subscription and our other business segment and key operating metrics for our subscription business for year-to-date values as well as each of the last eight fiscal quarters.

Average monthly retention. Average monthly retention is measured as the monthly retention rate of enrolled subscription pets for each applicable period averaged over the 12 months prior to the period end date. As such, our average monthly retention rate as of MarchJune 31,30, 2026 is an average of each month’s retention from AprilJuly 1, 2025 through MarchJune 31,30, 2026. We calculate monthly retention as the number of pets that remain after subtracting all pets that cancel during a month, including pets that enroll and cancel within that month, divided by the total pets enrolled at the beginning of that month. We monitor average monthly retention because it provides a measure of member satisfaction and allows us to calculate the implied average subscriber life in months.

The following table presents the reconciliation of our non-GAAP financial measures from corresponding GAAP measures for year-to-date values as well as each of the last eight fiscal quarters (in thousands):

The following table reconciles GAAP new pet acquisition expense to non-GAAP net acquisition cost (infor thousands)year-to-date forvalues as well as each of the last eight fiscal quarters (in thousands):

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025. Total revenue increased by $42.1$39.4 million, or 12%,11%, to $384.0$392.9 million for the three months ended MarchJune 31,30, 2026. Revenue from our subscription business segment increased by $36.4$34.5 million, or 16%,14%, to $269.5$276.7 million for the three months ended MarchJune 31,30, 2026. This increase was primarily due to ana 11%9% increase in monthly average revenue per pet and an increase in subscription pet months (the sum of pets enrolled for each month during a period) for policies underwritten by Trupanion. Our subscription pets enrolled increased by 52,93858,194 pets, or 5%, to 1,105,7831,124,548 for the three months ended atJune March 31,30, 2026, which wasrepresented consistenta with1% theincrease in growth rate of pets enrolled incompared to the prior year period.period's growth rate of 4%. Revenue from our other business segment increased by $5.7$4.8 million, or 5%,4%, to $114.6$116.2 million for the three months ended MarchJune 31,30, 2026. This increase was primarily driven by a 22% increase in monthly average revenue per pet in this segment, partially offset by a decrease in pet months primarily reflecting the expected run-off of pets we historically insured for Pets Best.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025. Total cost of revenue for our subscription business segment increased by $26.6$24.8 million, or 14%,13%, to $216.5$220.3 million, for the three months ended MarchJune 31,30, 2026. This increase was driven by a $23.2$21.9 million, or 14%,13%, increase in veterinary invoice expense and a $3.4$2.8 million, or 16%,13%, increase in other cost of revenue. The 14%13% increase in veterinary invoice expense was driven by aan 9%8% increase in veterinary invoice expense per pet and an increase in total subscription pet months for policies underwritten by Trupanion. The 16%13% increase in other cost of revenue was primarily due to general increases in costs attributable to growth in our membership and subscription revenue. Subscription business total cost of revenue decreased from 81% to 80% of revenue year-over-year primarily due to growth in subscription revenue outpacing growth in subscription veterinary invoice expense.

Total cost of revenue for our other business segment increased by $5.1$4.3 million, or 5%,4%, to $106.1$107.5 million for the three months ended MarchJune 31,30, 2026. This increase was primarily driven by a $10.8$2.0 million, or 14%,2%, increase in veterinary invoice expense,expense partially offset byand a $5.7$2.3 million, or 26%11%, decreaseincrease in other cost of revenue. The 14%2% increase in veterinary invoice expense was primarily driven by a 31%19% increase in veterinary invoice expense per pet, partially offset by a decrease in pet months in this segment primarily reflecting the expected run-off of pets we historically insured for Pets Best. Within our other business segment, fluctuations in other cost of revenue are largely driven by trends in revenue and veterinary invoice expense.expense Total cost of revenue for the other business segmentand remained materially consistent at 93% of segment revenue year-over-year.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025. Technology and development expenses increased by $3.2$4.2 million, or 40%,49%, to $11.3$12.8 million for the three months ended MarchJune 31,30, 2026. This increase was primarily due to a $1.7$1.4 million increase in stock-based compensation expenses primarily driven by a one-time award modification, a $0.9 million increase in new product exploration and development expense, a $0.8 million increase in general compensation and other employee-related expenses, a $0.8$0.6 million reduction in capitalized expenditures related to internally developed software projects, and a $0.6$0.5 million increase in newIT product exploration and developmentinfrastructure-related expenses. Technology and development expenses increased from 2% to 3% of total revenue year-over-year.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025. General and administrative expenses decreased by $0.8$0.6 million, or 4%,3%, to $19.1$19.5 million for the three months ended MarchJune 31,30, 2026. This decrease was primarily driven by decreases of $1.1 million in professional services and $2.4$2.3 million in underwriting fees related to our Canadian business,business and $0.3 million in stock-based compensation expenses, partially offset by an increaseincreases of $1.4$1.6 million in generalforeign compensationconsumption taxes and other employee-related expenses and a $1.3$0.3 million increase in other miscellaneous expenses. General and administrative expenses decreased from 6% to 5% of total revenue year-over-year.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025. New pet acquisition expenses increased by $2.1$3.0 million, or 10%,15%, to $22.6$22.8 million for the three months ended MarchJune 31,30, 2026. This increase was primarily driven by increased marketing spend as we have begun deploying more capital to acquire new pets in a disciplined manner. New pet acquisition expense as a percentage of revenue remained constant at 6%.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025. Depreciation and amortization expense decreased by $0.1$0.3 million, or 2%,7%, to $3.7 million for the three months ended MarchJune 31,30, 2026, andprimarily remaineddriven consistentby atfewer 1%internally ofdeveloped totalsoftware revenueprojects year-over-year.placed in-service during the period.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025. Total other (income), net increaseddecreased by $1.2$7.2 million from income of less than $0.1$8.2 million to income of $1.2$1.0 million for the three months ended MarchJune 31,30, 2026, primarily due to a $1.3$7.8 million realized gain recognized on the nonmonetary exchange of our Baystride preferred stock investment for intellectual property during 2025 and an increase in foreign currency losses of $0.9 million. These decreases in income were partially offset by a decrease in interest expense partiallyof offset$1.9 by lower investment income.million.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025. Income tax expense increaseddecreased by$0.6 million from $1.1 million from a expense of less than $0.1 million to expense of $1.1$0.5 million for the three months ended MarchJune 31,30, 2026, primarily due to the initial transfer of our Canadian insurance business to GPIC, resultingGPIC in anthe increaseprior year quarter, which resulted in taxablea incometrue-up into Canada.the annual effective tax rate for the three months ended June 30, 2025.

As of MarchJune 31,30, 2026, we had $383.7$398.5 million in cash, cash equivalents and short-term investments, of which $324.4$344.1 million was held by our insurance entities. Outside of insurance entities, we held $59.3$54.4 million in cash, cash equivalents and short-term investments with an additional $5.0$3.5 million available under our PNC Facility.

In April 2021, our board of directors (the "Board") approved a share repurchase program, pursuant to which we may, between May 2021 and May 2026,could repurchase outstanding shares of our common stock.stock, Whilebetween May 2021 and May 2026. In June 2026, the Board approved a new share repurchase program, pursuant to which we are authorized to repurchase up to an aggregate of $100.0 million of our boardoutstanding shares of directorscommon hasstock, approvedwith no expiration date. We are not obligated to repurchase any specific number or dollar amount of shares, and the program, any repurchase activity is subject to quarterly assessmenttiming and boardactual approval,number basedof shares repurchased will depend on variousa factorsvariety of factors, including our compliance with the PNC Facility, available cash, ourcash flow from operations, stock priceprice, relativegeneral toeconomic, our estimated intrinsic value, forecasted operating results,business and availablemarket opportunitiesconditions, toand deployalternative capital.investment opportunities. We repurchased no shares under this program during the threesix months ended MarchJune 31,30, 2026.

Net cash provided by operating activities was $14.6$35.6 million for the threesix months ended MarchJune 31,30, 2026, compared to $16.0$31.0 million for the threesix months ended MarchJune 31,30, 2025. This decreaseincrease was primarily driven by timing differences in working capital activities partially offset by improved operating results largely driven by higher revenue and improved subscription business margins.margins, partially offset by timing differences in working capital activities. Changes in accounts receivable and deferred revenue were primarily related to annual policies with annual payment terms within our other business segment. Changes in our reserve for veterinary invoices are driven by multiple factors, including ongoing analysis of claims frequency and severity. Additionally, changes in our accounts payable, accrued liabilities, and other liabilities are primarily due to differences in timing of payments.

Net cash providedused by investing activities was $0.1$22.4 million for the threesix months ended MarchJune 31,30, 2026, primarily consisting of $48.9 million in sales and maturities of investment securities, partially offset by purchases of investment securities of $47.9 million as well as $0.8 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing and internal policy management improvements. Net cash used in investing activities was $9.0 million for the three months ended March 31, 2025, primarily consisting of purchases of investment securities of $40.9$120.0 million as well as $1.9$2.7 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing and internal policy management improvements, partially offset by $33.2$100.2 million in sales and maturities of investment securities. Net cash used in investing activities was $51.4 million for the six months ended June 30, 2025, primarily consisting of purchases of investment securities of $142.0 million as well as $4.9 million of capital expenditures primarily related to the development of internal-use software focused on member experience, claims processing and internal policy management improvements, partially offset by $94.3 million in sales and maturities of investment securities.

Net cash used in financing activities was $2.7$5.3 million for the threesix months ended MarchJune 31,30, 2026, primarily consisting of $2.5$5.0 million in repayments on the PNC Facility. Net cash used in financing activities was $0.5$16.3 million for the threesix months ended MarchJune 31,30, 2025, primarily consisting of $0.3$15.5 million in repayments on the Prior Credit Facility, as well as $0.9$1.7 million in shares withheld to satisfy tax withholding, partially offset by $1.0$1.3 million in proceeds from exercise of stock options.

Loans under the PNC Facility bear interest at a reference rate plus an applicable margin, which will generally be the SOFR reference rate plus 2.75% per annum. TheWe Company makesmake quarterly principal payments of $2.5 million on the term loan facility. The CompanyWe may voluntarily prepay loans or reduce revolving commitments under the PNC Facility at any time without premium or penalty.

As of MarchJune 31,30, 2026, our insurance entities collectively held $94.2$94.9 million in cash and cash equivalents, to be used for operating expenses of our insurance entities, $230.2$249.2 million in short-term investments and $300.7$298.0 million in other current assets. The majority of the assets in our insurance entities are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate.

APIC, our wholly-owned insurance subsidiary domiciled in New York, underwrites all of our policies in the U.S. As our business in the U.S. grows, the amount of capital we are required to maintain to satisfy our risk-based capital requirements will also increase, though risk-based capital requirements also take our overall rate of growth into consideration. Recently, our other business segment growth has slowed, and we currently expect that to continue, which would reduce capital requirements. In February 2026 and August 2026, APIC distributed an extraordinary dividenddividends of $14.9 million and $10.0 million to Trupanion, Inc.Inc., respectively. APIC's primary regulator is the New York Department of Financial Services ("NY DFS").

GPIC, our wholly-owned insurance subsidiary domiciled in CanadaCanada, underwrites the majority of our policies in Canada. We are continuing to transition the remaining portion of our insurance activity in Canada to GPIC from a fronting arrangement with Accelerant Insurance Company of Canada (formerly Omega General Insurance Company) ("Accelerant"). Pursuant to the Canadian Office of the Superintendent of Financial Institutions ("OSFI") regulations, we have contributed CAD $29.5$38.9 million to GPIC as of MarchJune 31,30, 2026, as the required statutory capital for this subsidiary. The capital we maintain at GPIC is, and for the foreseeable future may continue to be, more than the amount that we historically held subject to our fronting arrangement with Accelerant.

Under the terms of our agreements with Accelerant, we retain any financial risk associated with our Canadian business. Accelerant's Canadian insurance operations are supervised and regulated by Canadian federal, provincial and territorial governments and Accelerant is a fully licensed insurer in all of the Canadian provinces and territories in which we do business. As we transition more of the business to GPIC, the amount we are required to fund in the Canadian trust account will be reduced (as discussed below).

WICL is domiciled in Bermuda and regulated by the Bermuda Monetary Authority ("BMA"). WICL Segregated Account AX was established by WICL, with Trupanion, Inc. as the shareholder, to enter into a reinsurance agreement with Accelerant for our business activity in Canada. All of the assets and liabilities of WICL Segregated Account AX are legally segregated from other assets and liabilities within WICL, and all shares of the segregated account are owned by Trupanion, Inc. Trupanion, Inc. received dividends of $3.3 million and $5.0 million from WICL Segregated Account AX in February and May 2026, respectively, as permitted under our agreements with WICL. As required by OSFI regulations related to our reinsurance agreement with Accelerant, we are required to maintain a Canadian Reinsurance Trust account with the greater of CAD $2.0 million or 120% of unearned Canadian premium plus 20% of outstanding Canadian claims, including all incurred but not reported claims. As of MarchJune 31,30, 2026, the account held CAD $2.9$2.0 million which we expect will continue to decrease as we rollover our Canadian book of business to GPIC.million.

We enter into long-term contractual obligations and commitments in the normal course of business, consisting primarily of debt obligations and non-cancellable vendor service agreements. In November 2025, we entered into the PNC Agreement, which provides up to $120.0 million of credit, including a $100.0 million term loan and a $20.0 million revolving loan facility. We used the proceeds under the PNC Agreement to repay all amounts due and outstanding under our Prior Credit Facility. The PNC Agreement will require us to repay the underlying obligations over a three-year term at SOFR plus a margin. Refer to Note 7,8, Debt, included in Item 1 of Part I of this report, for further details regarding the credit agreement, including interest and future principal repayments.