Palomar (PLMR) Financials

Palomar Holdings, Inc. (NASDAQ:PLMR) has demonstrated solid financial performance and growth over the past four years, judging by the analysis of their quarterly financial statements from Q3 2022 through Q1 2025. Here are the key insights distilled from their income statements, cash flow statements, and balance sheets:

• Consistent growth in Total Revenue: Palomar's total revenue has increased from approximately $80.4 million in Q3 2022 to $174.5 million in Q1 2025, driven primarily by rising premiums earned which climbed from around $77.9 million to $164.1 million in the same periods.
• Steady increase in Net Income: The net income attributable to common shareholders has shown a healthy upward trend, with Q1 2025 reporting about $42.9 million compared to $18.4 million in Q3 2023, reflecting improving profitability.
• Rising Earnings Per Share (EPS): Basic and diluted EPS have risen over time, with Q1 2025 basic EPS at $1.61 and diluted EPS at $1.57, compared to $0.75 and $0.73, respectively, in Q3 2023, indicating increasing shareholder value.
• Growing asset base: Total assets grew from approximately $1.22 billion in Q3 2022 to about $2.43 billion in Q1 2025, showcasing expansion and strengthening of the company's financial position.
• Improvement in equity position: Total common equity increased from $421 million in Q3 2023 to $790 million in Q1 2025, signaling higher capitalization and potential to absorb losses or fuel growth.
• Strong cash flow from operating activities: Q1 2025 reported net cash from operating activities at $87.2 million, supporting the business's operational health and liquidity.

• Interest Expense has substantially decreased: Interest expense fell drastically from $1.02 million in Q1 2023 to around $85,000 in Q1 2025, largely reflecting reduction or refinancing of long-term debt. However, this will need monitoring as interest expense impacts net income.
• Non-interest expenses, including Property & Liability Insurance Claims and Amortization, have increased in line with revenue growth, indicating scaling operations but requiring efficient cost management.
• Cash and cash equivalents show a rising trend, reaching about $119 million in Q1 2025 from $53 million in Q3 2023, which offers liquidity but may also signal conservative deployment of capital.
• Issuance and repurchase of common equity fluctuate quarterly, reflecting active capital management, which might affect share count and EPS metrics intermittently.

• Declining net interest income (expense): The company reported a net interest expense in recent quarters, albeit much smaller compared to earlier years, which can impact profitability if sustained.
• Negative net cash from investing activities across quarters: Continuous and sizable purchases of investment securities (hundreds of millions) result in negative investing cash flow, indicating significant capital deployment which must result in returns to be beneficial.
• Increasing unearned premiums liability and claims expenses: While consistent with growth, these liabilities and expenses have increased substantially, which could pressure margins if claims experience worsens.
• Accumulated Other Comprehensive Income (AOCI) shows negative values, indicating unrealized losses on certain investments or foreign currency impacts, introducing some volatility to equity.
• Long-term debt balance was reduced to zero by Q3 2024 but was recorded in prior years, with associated cash interest paid fluctuating; debt management appears a focus but could constrain flexibility if debt needs rise.

In summary, Palomar Holdings has exhibited solid top- and bottom-line growth, improving shareholder returns, and a stronger balance sheet over recent quarters. The company's sizable investments in securities and growth in underwriting liabilities require careful ongoing monitoring to ensure they translate into sustainable profitability and risk management. Investors should also watch for interest expense trends and the company's ability to manage operating costs as it scales.