10-Q: FOXO Technologies Reports Q2 Revenue Surge Amidst Delisting

FOXO Technologies Inc. reported a significant revenue increase in Q2 2025 driven by recent healthcare acquisitions, but faces substantial doubt about its going concern ability and delisting from NYSE American.

Summary

• Net revenues for the six months ended June 30, 2025, surged to $8.39 million, a substantial increase from $34,654 in the prior year, primarily due to the acquisitions of Myrtle Recovery Centers, Inc. and Rennova Community Health, Inc. (RCHI).
• The net loss attributable to FOXO improved to $1.14 million for the six months ended June 30, 2025, compared to a loss of $3.67 million in the same period last year.
• The company recorded a non-cash gain of $1.86 million from the extinguishment of Senior PIK Notes during the six months ended June 30, 2025, by exchanging them for Series B Preferred Stock.
• Cash and cash equivalents increased to $321,789 as of June 30, 2025, from $68,268 at December 31, 2024.
• Working capital deficit improved slightly to $27.3 million at June 30, 2025, from $29.8 million at December 31, 2024, but remains substantial.
• Total debt increased to $11.2 million as of June 30, 2025, from $10.2 million at December 31, 2024.
• Cash used in operating activities increased to $3.72 million for the six months ended June 30, 2025, compared to $1.57 million in the prior year period.
• The company completed two reverse stock splits: 1-for-10 effective April 28, 2025, and 1-for-1.99 effective July 27, 2025.
• NYSE American commenced delisting proceedings on August 12, 2025, due to the low selling price of Class A Common Stock, leading to its suspension from trading and subsequent commencement of trading on the OTC Markets on August 13, 2025.

Sentiment

Score: 3

Explanation: While revenue growth is strong due to acquisitions, the company faces severe financial distress, including a significant working capital deficit, increased debt, and a 'going concern' warning. The delisting from NYSE American is a major negative event, overshadowing operational improvements and capital-raising efforts. The overall outlook remains highly uncertain and risky.

Positives

• Net revenues significantly increased to $8.39 million for the six months ended June 30, 2025, primarily due to successful acquisitions in the healthcare sector.
• Net loss attributable to FOXO improved by $2.52 million, reducing to $1.14 million for the six months ended June 30, 2025.
• A non-cash gain of $1.86 million was recognized from the extinguishment of Senior PIK Notes by converting them into Series B Preferred Stock, improving the capital structure.
• Cash and cash equivalents increased to $321,789, providing a short-term liquidity boost.
• The working capital deficit saw a slight improvement, reducing by $2.58 million.
• Legal actions related to Senior PIK Notes were successfully dismissed by the court after the notes were exchanged for Series B Preferred Stock.

Negatives

• The company incurred a net loss to common stockholders of $1.58 million for the six months ended June 30, 2025.
• Cash used in operating activities increased significantly to $3.72 million for the six months ended June 30, 2025, indicating higher cash burn.
• Total debt increased to $11.2 million as of June 30, 2025.
• Interest expense more than doubled to $1.9 million for the six months ended June 30, 2025, partly due to default penalties and interest on promissory notes.
• The New RCHI Note of $1.0 million is in default as of June 30, 2025, and discussions are ongoing for maturity extension.
• The note payable to RHI in connection with the Myrtle acquisition ($0.7 million balance) is in default as of June 30, 2025.
• An outstanding loan under accounts receivable sales agreements is in payment default.
• The company has retained liabilities for former CEO severance despite determining termination was for cause, due to ongoing demand.
• Several legal actions seeking payment are ongoing, including $120,000 from Gateway Group, Inc., $58,000 from Data Shepherd Services, Inc., and $123,250 from func.media inc.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to a history of losses, significant working capital deficit, and reliance on external financing.
• The company's Class A Common Stock was delisted from NYSE American and commenced trading on the OTC Markets due to low selling price, which may impact liquidity and investor confidence.
• The company's ability to fund operations for the next twelve months is insufficient without additional financing or increased cash flows.
• There is no assurance that additional sources of financing will be available on favorable terms or at all.
• Failure to raise capital could lead to further curtailment or suspension of operations, sale of the company, dissolution, or bankruptcy.
• The full scope of obligations to pre-existing debt holders or other creditors for the RCHI acquisition remains unresolved, with potential for additional purchase price consideration.
• The company faces risks related to the timing and accuracy of the integration of information from its various accounting systems, contributing to material weaknesses in internal control over financial reporting.

Future Outlook

Management expects the acquired Myrtle and RCHI businesses to generate a small cash flow surplus through December 31, 2025. However, the company does not have sufficient capital to fund its corporate overhead for at least the next 12 months and will require additional financing. The Labs segment is focusing on Bioinformatics Services and R&D for an AI platform for health and well-being data insights. The Board of Directors has approved pursuing a spin-off of the FOXO Labs, Inc. subsidiary. The company has also extended the period for settling qualifying debt and liabilities through June 30, 2026.

Management Comments

• "The Companys history of losses requires management to critically assess its ability to continue operating as a going concern."
• "While the Company has recently improved its capital structure, until such time as it is able to generate positive cash flows from operations, it will need to obtain external sources of financing to fund its operations."
• "There can be no assurances that such sources of financing will be available, or if available at all, on favorable terms."
• "FOXO acquired Myrtle and RCHI as synergistic opportunities to expand its operations into the healthcare sector and as a complement to its epigenetic biomarkers of human health, wellness and aging."
• "We plan to grow this division by acquisition and investment in new operations in targeted areas."
• "We plan to expand the Myrtle business model by acquiring additional operating facilities and by replicating the model in other rural hospital properties or suitable premises."
• "We continue to believe that its Epigenetic APP asset will play a valuable part in its Epigenetic business, which makes up its Labs segment, but needs to make further investment for this asset to generate sales."
• "Without certainty on the timeframe, the Company believed that it was appropriate to impair the value of the asset in its records in the year ended December 31, 2024."
• "We do not believe the demand received on November 20, 2024 has any merit and will vigorously dispute any claim for payment [regarding former CEO severance]."

Industry Context

FOXO Technologies is expanding its footprint in the healthcare services sector through acquisitions of rural hospitals and behavioral health facilities, aligning with a trend towards integrated healthcare delivery. Simultaneously, its Labs segment is positioned in the burgeoning field of epigenetics and AI-driven health insights, reflecting the broader industry's move towards personalized medicine and preventative health technologies. The shift to focus on Bioinformatics Services and a potential spin-off of FOXO Labs indicates a strategic pivot to capitalize on specialized areas within biotech, while the healthcare acquisitions provide a more immediate revenue stream.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• Smithline Family Trust II vs. FOXO Technologies Inc. and Jon Sabes: Settlement agreement reached, liability reduced from $2.3 million (May 28, 2024) to $0.4 million (June 30, 2025), and further to $97,837 (August 9, 2025) through share issuances.
• Former CEO Severance (Jon Sabes): Company determined termination was for cause (November 14, 2022), but retained liabilities due to a demand letter received on November 20, 2024; company disputes the claim.
• Illumina Judgment: Hennepin County District Court granted Illumina, Inc.'s Motion for Summary Judgment for $0.8 million on June 21, 2024; settled on July 23, 2025, with an initial $100,000 payment and $144,613 payable in five quarterly installments.
• Senior PIK Notes: Legal actions filed by John Nash and Mitchell Kersch (July 2024) for approximately $0.8 million and $0.4 million, respectively, were dismissed by the court after the notes were exchanged for Series B Preferred Stock on January 22, 2025.
• Gateway Group, Inc.: Legal action filed in July 2025 in Orange County, California, seeking $120,000; liability included in financial statements, no resolution yet.
• Data Shepherd Services, Inc.: Received a judgment against the company in Q2 2025 for an unpaid balance of approximately $58,000; liability included in financial statements, no resolution yet.
• func.media inc.: Filed a legal action in Minnesota in June 2025 seeking a total sum of $123,250; liability included in financial statements, no resolution yet.

Related Party Transactions

• Acquisition of Myrtle Recovery Centers, Inc. from RHI for $0.5 million (Class A Common Stock and note payable).
• Acquisition of Rennova Community Health, Inc. (RCHI) from RHI for $100 and a $22.0 million senior secured note (RCHI Note), with $21.0 million exchanged for Series A Preferred Stock and a new $1.0 million RCHI Note issued.
• Additional RCHI Note of $5.8 million issued to RHI as additional consideration for the RCHI acquisition due to settlement of pre-existing debts.
• Lease agreements between Myrtle and RHI subsidiary, and SCCH and RHI subsidiary, for facility leases with monthly base rentals of $35,000 and $65,000, respectively, with annual increases.
• RCHI and SCCH contracted with InnovaQor, Inc. (where RHI holds preferred stock and Mr. Lagan is controlling shareholder) for health information technology services totaling $70,440 (Q2 2025) and $140,580 (YTD Q2 2025).
• Outstanding accounts payable to Andrew Poole (former director) of $204,774 and an Additional Poole Note of $42,500.
• Outstanding accounts payable to InnovaQor of $169,498 as of June 30, 2025.
• Rent payable to a subsidiary of RHI of $88,110 as of June 30, 2025.
• Accrued interest on related parties notes payable of $1,004,828 as of June 30, 2025.
• Director fees payable of $70,000 as of June 30, 2025.
• Termination of KR8 Agreement (where a director and former interim CFO were equity owners) resulted in issuance of 3,000 shares of Series D Preferred Stock for $3.0 million owed.
• Termination of Services Agreement with Mark White (former interim CEO) included payment of $100,000 and a promissory note of $500,000 (satisfied by $250,000 payment), and his appointment as CEO of FOXO Labs with a base salary and car lease reimbursement.

Stakeholder Impact

• **Shareholders**: Significant dilution from ongoing equity issuances and conversions of debt to equity. The delisting from NYSE American to OTC Markets will likely reduce liquidity and investor interest, potentially impacting share price negatively. The 'going concern' warning poses a fundamental risk to investment value.
• **Creditors**: Some notes payable are in default, indicating repayment challenges. However, the company is actively engaging in debt-to-equity conversions and extensions to manage obligations, which may provide some relief but also signals financial strain.
• **Employees**: The company's financial instability and 'going concern' warning could create uncertainty regarding job security and future compensation. Accrued payroll and related liabilities, including past due payroll taxes, suggest potential issues with employee payments.
• **Customers (Healthcare Segment)**: The acquisitions of Myrtle and RCHI aim to expand healthcare services, potentially benefiting patients in East Tennessee through behavioral health and critical access hospital services. However, the company's financial challenges could impact service quality or continuity if not resolved.
• **Suppliers**: Accounts payable remain high, indicating potential delays in payments to suppliers, which could strain relationships and impact future supply chain reliability.
• **Regulatory Authorities**: The delisting from NYSE American and ongoing legal proceedings highlight regulatory scrutiny and compliance challenges.

Next Steps

• Continue ongoing capital-raising initiatives to fund operations and execute business strategy.
• Pursue additional strategic acquisitions that are expected to contribute positive cash flow.
• Expand the Myrtle business model by acquiring additional operating facilities and replicating the model in other rural hospital properties or suitable premises.
• Focus Labs segment efforts on Bioinformatics Services and research and development for an AI platform for health and well-being data-driven insights.
• Leverage extensive epigenetic data and team expertise to build strategic alliances in academia, business, healthcare, and government.
• Evaluate and develop commercialization opportunities for Labs product and service offerings and research findings.
• Pursue the spin-off of the FOXO Labs, Inc. subsidiary.
• Continue discussions with RHI to extend the maturity dates of the New RCHI Note and the note payable for the Myrtle acquisition.
• Vigorously dispute the demand for payment from former CEO Jon Sabes regarding severance.
• Make remaining quarterly payments for the Illumina judgment settlement.
• Address ongoing legal actions from Gateway Group, Inc., Data Shepherd Services, Inc., and func.media inc.
• Continue to review and improve internal controls over financial reporting to address identified material weaknesses.

Key Dates

Recommendation

Despite a significant increase in revenue driven by recent acquisitions, FOXO Technologies Inc. faces severe financial distress. The 'going concern' warning, substantial working capital deficit, increasing debt, and rising interest expenses indicate a precarious financial position. The delisting from NYSE American to the OTC Markets is a major negative catalyst, severely impacting liquidity and investor confidence. While the company is actively attempting to restructure debt and raise capital, the fundamental risks, including ongoing legal proceedings and material weaknesses in internal controls, suggest a high probability of further value erosion for common stockholders. The operational improvements are overshadowed by the overwhelming financial instability and the loss of a major exchange listing.

Keywords

Healthcare, Biotechnology, Epigenetics, Hospital, Behavioral Health, SEC Filing, 10-Q, Financial Report, Going Concern, Delisting, Capital Raise, Debt Restructuring, Acquisitions, Rural Healthcare, AI, Machine Learning