SEATTLE, WA. August 3, 2023 -- Trupanion, Inc. (Nasdaq: TRUP), the leading provider of medical insurance for cats and dogs, today announced financial results for the second quarter ended June 30, 2023.

“In the second quarter, we saw early signs of margin expansion while exercising discipline in our capital deployment. As a result, we delivered sequential improvement in free cash flow, marking progress towards our goal of being free cash flow positive in the fourth quarter of 2023,” said Darryl Rawlings, Trupanion’s founder, CEO and Chair of the Board.

•Total revenue was $270.6 million, an increase of 23% compared to the second quarter of 2022.

•Total enrolled pets (including pets from our other business segment) was 1,679,659 at June 30, 2023, an increase of 25% over the second quarter of 2022.

•Subscription business revenue was $173.3 million, an increase of 19% compared to the second quarter of 2022 (20% on a constant currency basis).

•Subscription enrolled pets was 943,958 at June 30, 2023, an increase of 23% over the second quarter of 2022.

•Net loss was $(13.7) million, or $(0.33) per basic and diluted share, compared to net loss of $(13.6) million, or $(0.33) per basic and diluted share, in the second quarter of 2022.

•Adjusted EBITDA was $(3.2) million, compared to adjusted EBITDA of $(1.7) million in the second quarter of 2022.

•Operating cash flow was $(3.4) million and free cash flow was $(8.1) million in the second quarter of 2023. This compared to operating cash flow of $(3.1) million and free cash flow of $(7.1) million in the second quarter of 2022. Sequentially, free cash flow improved $3.9 million from the first quarter of 2023.

•Total revenue was $526.9 million, an increase of 24% compared to the first half of 2022.

•Subscription business revenue was $338.5 million, an increase of 18% compared to the first half of 2022 (20% on a constant currency basis).

•Net loss was $(38.5) million, or $(0.93) per basic and diluted share, compared to net loss of $(22.5) million, or $(0.55) per basic and diluted share, in the first half of 2022. Net loss for the six months ended June 30, 2023 included $4.2 million, or $0.10 per basic and diluted share, of non-recurring expenses

•Adjusted EBITDA was $(8.1) million, compared to adjusted EBITDA of $(0.5) million in the first half of 2022.

•Operating cash flow was $(10.3) million and free cash flow was $(20.2) million in the first half of 2023. This compared to operating cash flow of $(6.7) million and free cash flow of $(14.2) million in the first half of 2022.

•At June 30th, 2023, the Company held $236.1 million in cash and short-term investments. The Company maintained $213.1 million of capital surplus at its insurance subsidiaries. This was $57.3 million more than the estimated risk-based capital requirement of $155.8 million. In addition to these insurance entities, the Company held $25.4 million in cash & short-term investments at the end of the quarter, with additional $40 million available under its credit facility.

Trupanion’s management will host a conference call today to review its second quarter 2023 results. The call is scheduled to begin shortly after 1:30 p.m. PT/ 4:30 p.m. ET. A live webcast will be accessible through the Investor Relations section of Trupanion’s website at https://investors.trupanion.com/ and will be archived online for 3 months upon completion of the conference call. Participants can access the conference call by dialing 1-877-300-8521 (United States) or 1-412-317-6026 (International). A telephonic replay of the call will also be available after the completion of the call, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 10180014.

Trupanion is a leader in medical insurance for cats and dogs throughout the United States, Canada, Europe, Puerto Rico and Australia with over 900,000 pets enrolled. For over two decades, Trupanion has given pet owners peace of mind so they can focus on their pet's recovery, not financial stress. Trupanion is committed to providing pet owners with the highest value in pet medical insurance with unlimited payouts for the life of their pets. With its patented process, Trupanion is the only North American provider with the technology to pay veterinarians directly in seconds at the time of checkout. Trupanion is listed on NASDAQ under the symbol "TRUP". The company was founded in 2000 and is headquartered in Seattle, WA. Trupanion policies are issued, in the United States, by its wholly-owned insurance entity American Pet Insurance Company and, in Canada, by Omega General Insurance Company. Trupanion Australia is a partnership between Trupanion and Hollard Insurance Company. For more information, please visit trupanion.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to, among other things, expectations, plans, prospects and financial results for Trupanion, including, but not limited to, its expectations regarding its ability to continue to grow its enrollments and revenue, and otherwise execute its business plan. These forward-looking statements are based upon the current expectations and beliefs of Trupanion’s management as of the date of this press release, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All forward-looking statements made in this press release are based on information available to Trupanion as of the date hereof, and Trupanion has no obligation to update these forward-looking statements.

In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the ability to achieve or maintain profitability and/or appropriate levels of cash flow in future periods; the ability to keep growing our membership base and revenue; the accuracy of assumptions used in determining appropriate member acquisition expenditures; the severity and frequency of claims; the ability to maintain high retention rates; the accuracy of assumptions used in pricing medical plan subscriptions and the ability to accurately estimate the impact of new products or offerings on claims frequency; actual claims expense exceeding estimates; regulatory and other constraints on the ability to institute, or the decision to otherwise delay, pricing modifications in response to changes in actual or estimated claims expense; the effectiveness and statutory or regulatory compliance of our Territory Partner model and of our Territory Partners, veterinarians and other third parties in recommending medical plan subscriptions to potential members; the ability to retain existing Territory Partners and increase the number of Territory Partners and active hospitals; compliance by us and those referring us members with laws and regulations that apply to our business, including the sale of a pet medical plan; the ability to maintain the security of our data; fluctuations in the Canadian currency exchange rate; the ability to protect our proprietary and member information; the ability to maintain our culture and team; the ability to maintain the requisite amount of risk-based capital; our ability to implement and maintain effective controls, including over financial reporting; the ability to protect and enforce Trupanion’s intellectual property rights; the ability to successfully implement our alliance with Aflac; the ability to continue key contractual relationships with third parties; third-party claims including litigation and regulatory actions; the ability to recognize benefits from investments in new solutions and enhancements to Trupanion’s technology platform and website; and our ability to retain key personnel.

For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with the Securities and Exchange Commission (SEC), including but not limited to, Trupanion’s Annual Report on Form 10-K for the year ended December 31, 2022 and any subsequently filed reports on Forms 10-Q, 10-K and 8-K. All documents are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system at https://www.sec.gov or the Investor Relations section of Trupanion’s website at https://investors.trupanion.com.

Trupanion’s stated results may include certain non-GAAP financial measures. These non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry as other companies in its industry may calculate or use non-GAAP financial measures differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Trupanion’s reported financial results. The presentation and utilization of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Trupanion urges its investors to review the reconciliation of its non-GAAP financial measures to the most directly comparable GAAP financial measures in its consolidated financial statements, and not to rely on any single financial or operating measure to evaluate its business. These reconciliations are included below and on Trupanion’s Investor Relations website.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, Trupanion believes that providing various non-GAAP financial measures that exclude stock-based compensation expense and depreciation and amortization expense allows for more meaningful comparisons between its operating results from period to period. Trupanion offsets new pet acquisition expense with sign-up fee revenue in the calculation of net acquisition cost because it collects sign-up fee revenue from new members at the time of enrollment and considers it to be an offset to a portion of Trupanion’s new pet acquisition expense. Trupanion believes this allows it to calculate and present financial measures in a consistent manner across periods. Trupanion’s management believes that the non-GAAP financial measures and the related financial measures derived from them are important tools for financial and operational decision-making and for evaluating operating results over different periods of time.

Total pets enrolled and total subscription pets enrolled include pet enrollments in European markets, where policies are currently underwritten by third parties and Trupanion is acting as an insurance broker. Per pet metrics, however, exclude these European policies, as their revenue is currently earned from commissions, as opposed to the gross underwriting premiums earned by the remainder of our subscription business.

Contacts:

Laura Bainbridge

Senior Vice President, Corporate Communications

Investor.Relations@trupanion.com