CBIZ, Inc.

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Selected Terms Used in Notes to the Condensed Consolidated Financial Statements

ASA –Administrative Service Agreement

ASC – Accounting Standards Codification

ASU –Accounting Standards Update

CPA firm – Certified Public Accounting firm

FASB – The Financial Accounting Standards Board

GAAP – United States Generally Accepted Accounting Principles

SOFR – Secured Overnight Financing Rate

SEC – United States Securities and Exchange Commission

Marcum Acquisition - the Transaction

Description of Business: CBIZ, Inc., together with all of its wholly-owned subsidiaries ("CBIZ", the "Company", "we", "us", or "our"), is a diversified services company which, acting through its subsidiaries, has been providing professional business services since 1996, primarily to small and medium-sized businesses, as well as individuals, governmental entities, and not-for-profit enterprises throughout the United States and parts of Canada. CBIZ manages and reports its operations along three practice groups: Financial Services, Benefits and Insurance Services and National Practices. A further description of products and services offered by each of the practice groups is provided in Note 13, Segment Disclosures.

In December of 2024, the Company formed CBIZ CC, LLC and CBIZ Campus One Cell, LLC (collectively “Captive Insurance Company”). CBIZ CC, LLC, a sponsored captive core, is not expected to have any underwriting activities. CBIZ Campus One Cell, LLC, a sponsored captive cell, provides stop-loss coverages to a group of higher education institutions who self-insure their medical and prescription drug benefits. The term of the insurance policy is one year, and the insured is billed at the beginning of each month for that month’s coverage. Registered in the State of Vermont, the Captive Insurance Company commenced operation on January 1, 2025.

The Captive Insurance Company recognizes premium as revenue monthly as monthly coverage expires. For the three and six months ended June 30, 2025, revenue from the Captive Insurance Company was not material.

Basis of Consolidation: The accompanying unaudited condensed consolidated financial statements include the operations of CBIZ, Inc. and all of its wholly-owned subsidiaries after elimination of all intercompany balances and transactions. We have determined that our relationship with certain CPA firms with which we maintain ASAs qualify as variable interest entities ("VIEs"), and we are the primary beneficiary of such VIEs. The accompanying unaudited condensed consolidated financial statements do not reflect the operations or accounts of the VIEs as the impact is not material to the financial condition, results of operations, or cash flows of CBIZ.

Unaudited Interim Financial Statements: The unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and applicable rules and regulations of the SEC regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2024.

In the opinion of CBIZ management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows for the interim periods presented, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2025.

Use of Estimates: The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Changes in circumstances could cause actual results to differ materially from these estimates.

Changes in Accounting Policies: We have consistently applied the accounting policies for the periods presented as described in Note 1, Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024.

Certain prior period amounts have been reclassified to conform to current year presentation.

NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements -The FASB ASC is the sole source of authoritative GAAP other than the SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an ASU to communicate changes to the FASB codification. We assess and review the impact of all ASUs. ASUs not listed below were reviewed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted -In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about an entity's effective tax rate reconciliation as well as information on income tax paid. The guidance in this ASU is effective for public companies with annual periods beginning after December 15, 2024. We plan to adopt the guidance for the fiscal year ending December 31, 2025. We are currently evaluating the effect adoption of this ASU will have on our consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. The guidance in this ASU is effective for public companies with annual periods beginning after December 15, 2026, and interim periods within the annual period beginning after December 15, 2027. We plan to adopt the guidance for the fiscal year ending December 31, 2027. We are currently evaluating the effect of adopting this ASU will have on our consolidated financial statements.

In May 2025, the FASB issued ASU No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (VIE). This standard clarifies the guidance in determining the accounting acquirer in a business combination effected primarily by exchanging equity interests when the acquiree is a VIE that meets the definition of a business. The guidance in this ASU is effective for public companies with annual periods beginning after December 15, 2026, and interim periods within those fiscal years. We plan to adopt the guidance for the fiscal year ending December 31, 2027. We are currently evaluating the effect of adopting this ASU will have on our consolidated financial statements.

NOTE 3. BUSINESS COMBINATIONS

Acquisition of Marcum LLP

On November 1, 2024, the Company completed the acquisition of Marcum LLP (“Marcum”). The acquisition is referred to herein as the “Transaction”. During the six months ended June 30, 2025, the Company’s condensed consolidated statement of comprehensive income included $579.6 million of revenue and $119.1 million of operating income associated with the results of operations of Marcum.

Stock Consideration Transferred

At closing, the purchase price for the purpose of the Transaction consisted of an aggregate of $1,063.0 million of cash consideration and $934.7 million of the Company’s common stock, which represents a fair value of 13.6 million shares issued as stock consideration. Pursuant to the terms of the Transaction, with respect to the 13.6 million shares of stock consideration, approximately 4.9 million shares, in aggregate, were delivered from January 2, 2025 to July 1, 2025 to the selling shareholders. The remaining 8.7 million shares will be delivered in 29 monthly installments starting on August 1, 2025.

Measurement Period Adjustments

The Company applied the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”) and recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess purchase consideration recorded to goodwill. As the Company finalizes the estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months from the acquisition date).

During the six months ended June 30, 2025, the Company reassessed its estimates and inputs as new information about facts and circumstances that existed as of the acquisition date became known. As a result, the Company recorded a $23.0 million reduction in goodwill as a measurement period adjustment. The reduction to goodwill consists of a $21.0 million adjustment reflecting a reduction of the estimated settlement amounts associated with an acquired liability from $61.0 million to $40.0 million and a $2.0 million net increase in assets acquired. In the process, the Company also recorded a $8.7 million increase to goodwill as a result of recording an assumed liability associated with certain accrued personnel obligations previously unrecognized on the provisional opening balance sheet. The income statement impact, had those adjustments been made as of the acquisition date, was considered immaterial.

The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Marcum, with the excess recorded as goodwill (in thousands):

The preliminary purchase price allocation is subject to further refinement and may require adjustments to arrive at the final purchase price allocation. The above fair value of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the reporting date. The final determination of the fair value of certain assets and liabilities will be completed as soon as the necessary information, such as final working capital adjustments, becomes available but no later than one year from the acquisition date.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion of the Transaction.

NOTE 4. ACCOUNTS RECEIVABLE, NET

Accounts receivable, less allowance for doubtful accounts, reflects the net realizable value of receivables and approximates fair value. Unbilled revenue is recorded at estimated net realizable value. Assessing the collectability of the receivables (billed and unbilled) requires management judgment based on a combination of factors, including but not limited to, an evaluation of our historical incurred loss experience, credit-worthiness of our clients, age of the trade receivable balance, current economic conditions that may affect a client’s ability to pay, and reasonable and supportable forecasts. Receivables are charged-off against the allowance when the balance is deemed uncollectible.

Accounts receivable, net, at June 30, 2025 and December 31, 2024 was as follows (in thousands):

Changes to the allowance for doubtful accounts for the six months ended June 30, 2025 and year ended December 31, 2024 were as follows (in thousands):

NOTE 5. DEBT AND FINANCING ARRANGEMENTS

2024 Credit Facilities- Our primary debt financing arrangement is the Amended and Restated Credit Agreement, dated as of November 1, 2024, as amended by the First Amendment, dated as of March 7, 2025, by and among the Company, CBIZ, Inc. as the borrower, the lenders party thereto from time to time and Bank of America, N.A., as the agent, which provides $2.0 billion in senior secured credit facilities, consisting of term loans with an original principle amount of$1.4 billion (the “Term Loan”) and a$600.0 million revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan, as may be further amended, restated, supplemented or otherwise modified from time to time, the "2024 Credit Facilities"). On April 29, 2025, the Company entered into a Second Amendment (the "Debt Amendment") to the 2024 Credit Facilities. The Debt Amendment added a usual and customary "Available Amount" basket available for making of certain investments and/or restricted payments (including share repurchases) from time to time subject to the satisfaction of certain terms and conditions set forth therein and made certain other technical changes. The changes from the Debt Amendment have been accounted for as a modification under ASC 470, Debt ("ASC 470") and had an immaterial impact to the financial statements.

The 2024 Credit Facilities mature on November 1, 2029. The Term Loan provides for scheduled annual principal amortization payments of 5% in the first two years following closing,7.5%annually in the third and fourth year following closing and 10%in the fifth year following closing, with the balance due at maturity.

The 2024 Credit Facilities contains certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens or other encumbrances, making certain payments, investments, or to sell or otherwise dispose of a substantial portion of assets, or to merge or consolidate with an unaffiliated entity. The 2024 Credit Facilities also limit our ability to make dividend payments. Historically, we have not paid cash dividends on our common stock. Our Board of Directors has discretion over the payment and level of dividends on our common stock, subject to the limitations of the 2024 Credit Facilities and applicable law. The 2024 Credit Facilities contain a provision that, in the event of a defined change in control, the 2024 Credit Facilities may be terminated.

In addition, the 2024 Credit Facilities includes a financial covenant requiring that Total Net Leverage Ratio not exceed 5.00 to 1.00 initially, stepping down in increments to 3.75 to 1.00 during and after the seventh fiscal quarter after the closing (with a limited ability to temporarily increase in connection with material acquisitions commencing in the sixth fiscal quarter after the closing). The 2024 Credit Facilities also require a Minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 and affirmative and negative covenants that are in each case generally similar to those contained in our previous amended and stated 2022 credit facility, but with increases to certain baskets and caps and certain other exceptions. As of June 30, 2025 , we were in compliance with all covenants.

The balance outstanding under the 2024 Credit Facilities at June 30, 2025 and December 31, 2024 was as follows (in thousands):

The blended effective interest rates under the 2024 Credit Facilities and the 2022 Credit Facility, including the impact of interest rate swaps associated with those credit facilities, for the six months ended June 30, 2025 and 2024 were as follows:

We had approximately $370 million of available funds under the 2024 Credit Facilities at June 30, 2025, based on the terms of the commitment. Available funds under the 2024 Credit Facilities are based on a multiple of earnings before interest, taxes, depreciation and amortization as defined in the 2024 Credit Facilities, and are reduced by letters of credit, other indebtedness and outstanding borrowings under the 2024 Credit Facilities. Under the 2024 Credit Facilities, loans are charged an interest rate consisting of a base rate or term SOFR rate plus an applicable margin, letters of credit are charged based on the same applicable margin, and a commitment fee is charged on the unused portion of the 2024 Credit Facilities.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the 2024 Credit Facilities and the 2022 credit facility.

Other Line of Credit- We have an unsecured $20.0 million line of credit by and among CBIZ Benefits and Insurance, Inc. and Huntington National Bank ("line of credit"). We utilize this line of credit to support our short-term funding requirements of payroll client fund obligations due to the investment of client funds, rather than liquidating client funds that have already been invested in available-for-sale securities. The line of credit didnot have a balance outstanding at June 30, 2025 or December 31, 2024. The line of credit was renewed in July 2025 and will now terminate on July 30, 2026.

Interest Expense-Interest expense, including amortization of deferred financing costs, commitment fees, line of credit fees, and other applicable bank charges, for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):

NOTE 6. COMMITMENTS AND CONTINGENCIES

Letters of Credit and Guarantees- We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled $3.2 million and $3.2 million at June 30, 2025 and December 31, 2024, respectively. In addition, we provide license bonds to various state agencies to meet certain licensing requirements. The amount of license bonds outstanding was $2.2 million and $2.2 million at June 30, 2025 and December 31, 2024, respectively.

Legal Proceedings- On December 19, 2016, CBIZ Operations, Inc. ("CBIZ Operations") was named as a defendant in a lawsuit filed by Zotec Partners, LLC (“Zotec”) in the Marion County Indiana Superior Court. After various amendments, the lawsuit asserted claims under Indiana law for securities, statutory and common law fraud or deception, unjust enrichment, breach of contract, and vicarious liability against CBIZ Operations and a former employee of CBIZ MMP in connection with the sale of the CBIZ MMP medical billing practice to Zotec. The plaintiff claimed that CBIZ Operations had a duty to disclose the fact, unknown to employees of CBIZ Operations at the time of the transaction, that the former employee of CBIZ MMP had a financial arrangement with a Zotec vendor at the time CBIZ Operations sold CBIZ MMP to Zotec. The plaintiff sought damages of up to $177.0 million out of the $200.0 million transaction price. Trial was held in October 2021. The jury found in favor of CBIZ on all fraud, contract and other claims before it. On November 14, 2022, the trial court ruled in favor of CBIZ and against Zotec’s claim for statutory securities fraud. The court also ruled in favor of CBIZ on its counterclaim for indemnification under contract. The trial court conducted a hearing on December 12, 2023, to consider evidence regarding the amount of damages owed by Zotec to CBIZ on the counterclaim. On March 12, 2024, the court awarded CBIZ $3.1 million on its counterclaim. On April 10, 2024, Zotec filed a notice of appeal. On April 8, 2025, the Court of Appeals affirmed the trial court's dismissal of the securities fraud claim against CBIZ. The Court of Appeals reversed the award to CBIZ on its counterclaim. Both CBIZ and Zotec opted against appealing this decision, rendering the decision final.

On November 10, 2023, CBIZ was named as a defendant in a putative class action lawsuit in the United States District Court for the District of Massachusetts by an individual claiming to be an employee of a CBIZ client whose personally identifiable information (“PII”) was compromised and stolen during a cyberattack CBIZ experienced on or about May 31, 2023. As a result of this incident, hackers were able to access and download certain files from CBIZ’s MOVEit Transfer server. The lawsuit alleges that CBIZ and Progress Software Corporation, the owner of MOVEit Transfer, failed to adequately secure and safeguard the individual’s, and similarly situated employees of CBIZ’s clients, PII from unauthorized access. The lawsuit seeks various remedies, including actual, compensatory, and punitive damages, along with injunctive relief, costs, and attorneys’ fees.

On December 8, 2023, CBIZ was named as a defendant in a second putative class action lawsuit in the United States District Court for the District of Massachusetts by an individual making similar claims and seeking similar remedies as in the first lawsuit regarding the cyberattack CBIZ experienced on or about May 31, 2023.

Both cases were transferred into a multidistrict litigation, styled as In Re: MOVEit Customer Data Security Breach Litigation, pending in the United States District Court for the District of Massachusetts (the “MDL”). To date, the MDL has over 180 cases against over 100 different defendants, all with claims arising out of the cyberbreach by hackers of Progress Software Corporation’s MOVEit Transfer software. The cases in the MDL, including the cases against CBIZ, are in their earliest stages, with a stay in place until the MDL Court issues a scheduling order. Due to the early stage of litigation, the Company is not able to determine or predict the ultimate outcome of these lawsuits nor reasonably provide an estimate or range of the possible outcome or losses, if any.

In June of 2025, the Company settled litigation against a small group of former employees. As part of the settlement of that litigation, the Company received a settlement payment of $12.5 million, which was recorded as a pre-tax gain in “Other income, net” on the consolidated statements of comprehensive income for the three and six months ended June 30, 2025.

In addition to the items disclosed above, the Company is, from time to time, subject to claims and lawsuits arising in the ordinary course of business. We cannot predict the outcome of all such matters or estimate the possible loss, if any. Although the proceedings are subject to uncertainties in the litigation process and the ultimate disposition of these proceedings is not presently determinable, we intend to vigorously defend these matters.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the Company's commitments and contingencies.

NOTE 7. FINANCIAL INSTRUMENTS

Available-For-Sale Debt Securities- In connection with certain services provided by our payroll operations, we collect funds from our clients’ accounts in advance of paying client obligations. These funds held for clients are segregated and invested in accordance with our investment policy, which requires all investments carry an investment grade rating at the time of initial investment. These investments, primarily consisting of corporate and municipal bonds, are classified as available-for-sale and are included in the “Funds held for clients” line item on the accompanying unaudited Condensed Consolidated Balance Sheets. The par value of these investments totaled $39.0 million and $41.3 million at June 30, 2025 and December 31, 2024, respectively, and these investments have maturity or callable dates ranging from July 2025 through February 2028.

At June 30, 2025, unrealized losses on the securities were not material and have not been recognized as a credit loss because the bonds are investment grade quality and management is not required or does not intend to sell prior to an expected recovery in value. The bond issuers continue to make timely principal and interest payments.

The following table summarizes activities related to these investments for the six months ended June 30, 2025 and the year ended December 31, 2024 (in thousands):

In addition to the available-for-sale debt securities discussed above, we also held other depository assets in the amount of $2.4 million and $0.2 million at June 30, 2025 and December 31, 2024, respectively. Those depository assets are classified as Level 1 in the fair value hierarchy.

Interest Rate Swaps- We utilize interest rate swaps to manage interest rate risk exposure associated with our floating-rate debt under the 2024 Credit Facilities, or the forecasted acquisition of such liability. We do not purchase or hold any derivative instruments for trading or speculative purposes. Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on our interest rate swaps.

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying unaudited Condensed Consolidated Balance Sheets at June 30, 2025 and December 31, 2024 (amounts in thousands):

(1)Entered into during the second quarter of 2025.

Refer to Note 8, Fair Value Measurements, for additional disclosures regarding fair value measurements.

The following table summarizes the effects of the interest rate swaps on the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024 (in thousands):

NOTE 8. FAIR VALUE MEASUREMENTS

The following table summarizes our assets and (liabilities) at June 30, 2025 and December 31, 2024, respectively, that are measured at fair value on a recurring basis subsequent to initial recognition and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands):

During the six months ended June 30, 2025 and 2024, there were no transfers between the valuation hierarchy Levels 1, 2 and 3.

The following table summarizes the change in Level 3 fair values of our contingent purchase price liabilities for the six months ended June 30, 2025 and 2024 (pre-tax basis, in thousands):

The following table summarizes the changes in contingent purchase price consideration for previous acquisitions and contingent payments made for previous business acquisitions in the three and six months ended June 30, 2025 and 2024, respectively (in thousands):

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the fair value measurements and classification of our financial assets and liabilities.

NOTE 9. OTHER COMPREHENSIVE INCOME

The following table is a summary of other comprehensive income and discloses the tax impact of each component of other comprehensive (loss) income for the three and six months ended June 30, 2025 and 2024 (in thousands):

(1)Net of income tax expense of $22 and $68 for the three months ended June 30, 2025 and 2024, respectively. Net of income tax expense of $51 and $89 for the six months ended June 30, 2025 and 2024, respectively.

(2)Net of income tax benefit of $722 and $99 for the three months ended June 30, 2025 and 2024, respectively. Net of income tax benefit of $1,156 and income tax expense of $223 for the six months ended June 30, 2025 and 2024, respectively.

NOTE 10. COMMON STOCK

Common Stock Issued for the Transaction -Pursuant to the Agreement and Plan of Merger, dated as of July 30, 2024, by and among the Company, Marcum and the other parties thereto (the “Merger Agreement”) and as part of the total purchase price consideration we issued shares to the selling shareholders in the Transaction. Refer to Note 3, Business Combinations, for more detail.

Right of First Refusal Program - Pursuant to the Merger Agreement, the Company and selling shareholders entered into a Right of First Refusal Agreement (the “ROFR Agreement”). Under the ROFR Agreement, the selling shareholders granted the Company a right of first refusal to repurchase all or any portion of our common stock issued to the selling shareholders pursuant to the Merger Agreement. The Company holds the right of first refusal until November 1, 2028.

Share Repurchase Program - Over the past twenty years, our Board of Directors has annually renewed the Company’s share repurchase program, which permits the Company to repurchase, in accordance with SEC rules, up to 5 million shares of our outstanding common stock (i) in the open market, (ii) in privately negotiated transactions, or (iii) under Rule 10b5-1 trading plans (the “Share Repurchase Program”). The Board of Directors authorized the Share Repurchase Program on February 7, 2024, permitting repurchases through March 31, 2025, and February 11, 2025, permitting repurchases through March 31, 2026.

Privately negotiated transactions may include repurchases from employees, officers and directors and repurchases from former partners of Marcum pursuant to the ROFR Agreement, as discussed above.

Refer to Note 14, Common Stock, to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024 for more detail about the Share Repurchase Program.

We repurchased 1.0 million shares of our common stock at of $71.3 million under the ROFR Agreement during the six months ended June 30, 2025. Additionally, to settle statutory employee withholding related to vesting of stock awards, we repurchased 0.1 million shares of our common stock at cost of $7.8 million during the six months ended June 30, 2025 and 0.2 million shares at a cost of $11.2 million during the six months ended June 30, 2024.

NOTE 11. EMPLOYEE STOCK PLANS

On May 10, 2023, the shareholders of the Company approved an amendment to the 2019 Stock Omnibus Incentive Plan (the “2019 Plan”). The amendment added 1.5 million shares to the total number of shares that may be issued under the 2019 Plan. All other aspects of the 2019 Plan remain unchanged. The 2019 Plan, which expires in 2029, permits the grant of various forms of stock-based awards. A maximum of 4.6 million stock options, restricted stock or other stock-based compensation awards may be granted. The terms and vesting schedules for the stock-based awards vary by type and date of grant. Shares subject to award under the 2019 Plan may be either authorized but unissued shares of our common stock or treasury shares. Refer to Note 15, Employee Stock Plans to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the 2019 Plan.

Compensation expense for stock-based awards recognized during the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):

Stock Options and Restricted Stock Units and Awards – The Company didnot grant any stock options, nor were any stock options exercised during the six months ended June 30, 2025. As of June 30, 2025, we have 150 thousand stock options outstanding with a weighted average exercise price per share of $35.22.

The following table presents our restricted stock units and awards activity during the six months ended June 30, 2025 (in thousands, except per share unit data):

(1)Represents weighted average market value of the shares; awards are granted at no cost to the recipients.

Performance Share Units (“PSUs”) –PSUs are earned based on our financial performance over a contractual term ofthree years and the associated expense is recognized over that period based on the fair value of the award. Athree-year cliff vesting schedule of the PSUs is dependent upon the Company’s performance relative to pre-established goals based on an earnings per share target (weighted 70%) and total growth in revenue (weighted 30%). The fair value of PSUs is calculated using the market value of a share of our common stock on the date of grant. For performance achieved above specified levels, the recipient may earn additional shares of stock, not to exceed 200% of the number of PSUs initially granted. For the PSUs granted in 2025, the recipients may earn additional shares of stock, not to exceed 300% of the number of PSUs initially granted if performance achieved above specified levels.

The following table presents our PSUs activity during the six months ended June 30, 2025 (in thousands, except per share unit data):

(1)Represents weighted average market value of the PSUs; PSUs are granted at no cost to the recipients.

NOTE 12. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2025 and 2024 (in thousands, except per share data):

(1)A total of 13.6 million shares that were issued as consideration in connection with the Transaction are included for the three and six months ended June 30, 2025. Refer to Note 3, Business Combinations for more detail.

(2)A total of 63 thousand and 79 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2025, as their effect would be anti-dilutive. A total of 9 thousand and 96 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2024,as their effect would be anti-dilutive.

(3)Contingent shares represent additional shares to be issued for purchase price earned by former owners of businesses acquired by us once future conditions have been met.

(4)The denominator used in calculating diluted earnings per share did not include 239 thousand and 254 thousand PSUs for both the three and six months ended June 30, 2025, and 2024, respectively. The performance conditions associated with these PSUs were not met and consequently none of these PSUs were considered as issuable for the three and six months ended June 30, 2025 and 2024.

NOTE 13. SEGMENT DISCLOSURES

Our business units have been aggregated into three practice groups: Financial Services, Benefits and Insurance Services, and National Practices. The business units have been aggregated based on the following factors: similarity of the products and services provided to clients; similarity of the regulatory environment in which they operate; and similarity of economic conditions affecting long-term performance. The business units are managed along these segment lines. Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the segment lines.

Corporate and Other -Included in Corporate and Other are operating expenses that are not directly allocated to the individual business units. These expenses primarily consist of certain health care costs, gains or losses attributable to assets held in our non-qualified deferred compensation plan, stock-based compensation, consolidation and integration charges, certain professional fees, certain advertising costs, and other various expenses.

Accounting policies of the practice groups are the same as those described in Note 1, Basis of Presentation and Significant Accounting Policies, to the Annual Report on Form 10-K for the year ended December 31, 2024. Upon consolidation, intercompany accounts and transactions are eliminated, thus inter-segment revenue is not included in the measure of profit or loss for the practice groups. Performance of the practice groups is evaluated on income (loss) before income tax expense (benefit) excluding those costs listed above, which are reported in “Corporate and Other”.

The practice groups respective revenue and pre-tax income, significant segment expenses, and a reconciliation of segment profit or loss measure to the consolidated income before income tax expense for the three and six months ended June 30, 2025 and 2024 is presented below. We do not manage our assets on a segment basis, therefore segment assets are not presented below.

Segment information for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):

(1)Other costs, gains, and losses, net primarily consist of travel and entertainment costs, computer and technology related costs, depreciation and amortization expenses, and other discretionary costs.

NOTE 14. SUBSEQUENT EVENTS

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system such as permanent extensions of certain expiring provisions of the Tax Cuts and Jobs Act and restoration of favorable tax treatment for certain business provisions. Certain provisions are effective for us beginning in 2025. We are currently assessing its impact on our consolidated financial statements.

On July 9, 2025, we entered into an 18-month interest rate swap with a notional value of $100 million and a fixed rate of 3.85%. The interest rate swap expires on January 14, 2027.

On July 15, 2025, we entered into a 1-year interest rate swap with a notional value of $100 million and a fixed rate of 4.047%. The interest rate swap expires on July 14, 2026.

Subsequent to June 30, 2025 and up to July 25, we repurchase approximately 0.3 million shares of our common stock under the ROFR Agreement at a total cost of approximately $25.3 million.