Heritage Global (NASDAQ: HGBL) reported Q2 2026 revenue of US$12.265 million, down 14.3% from US$14.304 million a year earlier, while diluted EPS swung to a US$0.46 loss from a US$0.05 profit. Approximately US$21.7 million of noncash charges related to the substantial wind-down of Heritage Global Capital drove most of the GAAP loss. Adjusted EBITDA remained positive at US$1.187 million but declined from US$2.802 million, showing that the quarter’s weakness was not limited to the exit charges.
Core Financial Results
The revenue decline was concentrated in services, while higher asset sales provided a partial offset. Heritage Global’s operating result was dominated by a US$18.156 million impairment of equity-method investments and a US$3.531 million provision for credit losses associated with its decision to exit specialty lending.
The resulting US$20.976 million pretax loss was partly offset by a US$5.088 million income tax benefit, leaving a net loss of US$15.888 million.
| Metric | Q2 2026 | Q2 2025 | YoY change |
|---|---|---|---|
| Revenue | US$12.265M | US$14.304M | Down 14.3% |
| Operating income (loss) | (US$20.911M) | US$2.232M | Swung to loss |
| Operating margin, approximately | (170.5%) | 15.6% | Down 186.1 points |
| Net income (loss) | (US$15.888M) | US$1.637M | Swung to loss |
| Diluted EPS | (US$0.46) | US$0.05 | Swung to loss |
| EBITDA | (US$20.671M) | US$2.350M | Swung to loss |
| Adjusted EBITDA | US$1.187M | US$2.802M | Down 57.6% |
Business and Revenue Mix
Services revenue accounted for the overall contraction, falling by approximately 23%. Asset sales moved in the opposite direction but were not large enough to offset the services decline.
| Revenue category | Q2 2026 | Q2 2025 | YoY change |
|---|---|---|---|
| Services revenue | US$7.910M | US$10.266M | Down 22.9% |
| Asset sales | US$4.355M | US$4.038M | Up 7.9% |
The cost of services revenue declined to US$1.120 million from US$2.972 million, cushioning the effect of lower services revenue. The cost of asset sales was US$2.803 million, compared with US$2.921 million a year earlier.
After the quarter ended, Heritage Global acquired substantially all assets of Boston Note & Mortgage III on July 31, 2026. The seller-financed real estate note brokerage will become part of DebtX, expand the Financial Assets platform and is expected by the company to contribute segment revenue during the second half of 2026.
HGC Exit Charges Drove the GAAP Loss, but Adjusted EBITDA Also Fell
Heritage Global’s GAAP loss primarily reflects the decision to substantially wind down Heritage Global Capital, its specialty lending operation. The US$18.156 million impairment and US$3.531 million credit-loss provision were noncash, but together they reduced reported operating results by approximately US$21.7 million.
The adjusted results present a more moderate but still weaker picture. Heritage Global added back those two charges and US$171,000 of stock-based compensation to move from negative US$20.671 million of EBITDA to positive US$1.187 million of adjusted EBITDA. However, adjusted EBITDA still fell 57.6% year over year, indicating that removing the HGC-related charges did not eliminate the underlying earnings pressure.
Selling, general and administrative expenses rose to US$10.839 million from US$6.140 million. The credit-loss provision contributed to the increase, but the adjusted EBITDA decline shows that operating performance also weakened beyond the excluded noncash items.
Balance Sheet and Liquidity
Cash and cash equivalents fell to US$13.179 million at June 30 from US$20.522 million at the end of 2025. Net working capital declined to approximately US$9.4 million from US$18.1 million over the same period, as current assets fell more quickly than current liabilities.
Equity-method investments dropped to US$1.239 million from US$21.060 million, consistent with the impairment recognized during the HGC wind-down. Stockholders’ equity declined to US$51.912 million from US$66.983 million, while noncurrent third-party debt remained unchanged at US$4.100 million.
Management’s View
CEO Ross Dove described the HGC exit as a deliberate shift toward Heritage Global’s core, capital-light businesses. Management views the Boston Note acquisition as a way to expand the company’s capabilities across financial asset classes and said the balance sheet continues to provide flexibility for growth and profitability initiatives.
Recent Insider Transactions
Over the reported six-month period, insiders purchased 126,000 shares and sold 11,202 shares, resulting in net purchases of 114,798 shares. Total insider holdings were reported at approximately 4.24 million shares; these figures describe the transactions but do not establish insiders’ expectations for the company.
| Date | Insider | Transaction | Price | Reported value |
|---|---|---|---|---|
| May 21, 2026 | Nicholas Kirk Dove | Purchase | US$1.22 | US$31,590 |
| May 1, 2026 | James Edward Sklar | Sale | US$1.33 | US$4,966 |
| April 1, 2026 | James Edward Sklar | Sale | US$1.35 | US$5,041 |
| March 5, 2026 | Samuel Louis Shimer | Stock award | US$0.00 | US$0 |
| March 5, 2026 | Michael Hexner | Stock award | US$0.00 | US$0 |
| March 5, 2026 | Kelly S. Sharpe | Stock award | US$0.00 | US$0 |
| March 5, 2026 | Barbara A. Sinsley | Stock award | US$0.00 | US$0 |
| March 5, 2026 | William L. Burnham | Stock award | US$0.00 | US$0 |
| March 2, 2026 | James Edward Sklar | Sale | US$1.30 | US$4,854 |
| February 2, 2026 | James Edward Sklar | Sale | US$1.37 | US$5,116 |
Risks Investors Need to Watch
- Remaining specialty-lending exposure: The HGC wind-down produced substantial impairment and credit-loss charges. The collectability of receivables associated with the loan portfolio remains relevant to the final cost of the exit.
- Lower underlying profitability: Adjusted EBITDA remained positive but declined 57.6%, alongside lower services revenue and higher reported SG&A expenses.
- Transaction timing: Heritage Global identifies variability in the size and timing of asset liquidation transactions as a factor that can affect results from period to period.
- Reduced liquidity buffer: Cash and working capital both declined materially from year-end 2025, leaving a smaller balance sheet cushion even though third-party debt was unchanged.
Summary
Heritage Global’s second quarter was defined by the decision to exit specialty lending, which generated large noncash charges and pushed GAAP results deeply into loss territory. The decline in services revenue and adjusted EBITDA shows that operating pressure extended beyond those charges, while modest asset-sales growth provided only a partial offset. The next operating priorities are completing the HGC wind-down, stabilizing adjusted profitability and converting the Boston Note acquisition into Financial Assets revenue.
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