Company reports net loss but sees positive signs
Finance of America Companies (FOA) remained unprofitable in the second quarter of 2024 but anticipates a gradual revenue rebound in the third quarter.
The reverse mortgage lender reported a GAAP net loss of $5 million ($0.20 per basic share), following a $16 million net loss in the first quarter on a continuing operations basis. Adjusted net loss for the quarter stood at $1 million ($0.05 per share).
FOA’s Retirement Solutions segment, which earns revenue from net origination gains and fees on reverse mortgage loans, posted a pre-tax loss of $2 million. However, adjusted net income for the segment was $6 million, driven by increased volumes and reduced expenses.
While still negative, the company achieved a positive adjusted EBITDA of $9 million, marking the first positive quarter since 2022.
“Looking back, Q2 2023 marked the first quarter of the combined businesses of Finance of America and AAG,” said FOA chief executive Graham Fleming (pictured). “Since that time our revenues excluding other fair value changes, have grown by 33% and our expenses have reduced by 26%. Year-over-year, we have markedly reduced our ANI from $26 million to $1 million.
Read more: Finance of America merges reverse mortgage brands
“Furthermore, we have made a substantial turnaround in adjusted EBITDA, improving from a negative $26 million in 2023 to a positive $9 million in 2024. Beyond these improved results, we see significant milestones throughout the second quarter that we believe further establish a foundation for continued operational improvement and growth.
The company also underwent a reverse stock split in July 2024 to regain compliance with NYSE listing standards.
“Beginning in late 2022 and taking place over the last 18 months, we worked to transform our operation to align with our refocused strategy centered on retirement, the 55-plus demographic, and home equity,” president Kristen Siefert said in FOA’s earnings call. “With most of the work completed, we’ve turned our attention to strategic initiatives to optimize our platform and pave the way for future growth.”
Sieffert also noted that the company had seen strong demand for its proprietary products, with a 168% increase in submission volume quarter-over-quarter and a 30% reduction in average term time. FOA plans to launch specific marketing campaigns for its HomeSafe Second product by the end of the third quarter.
CFO Matt Engel confirmed that July production is on track to meet third-quarter guidance. Engel also mentioned that new lender partnerships have helped reduce cash burn.
FOA expects third-quarter loan volumes to range between $475 million and $500 million. The company plans to continue investing in digital technologies to enhance customer experience and market penetration.
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