Heritage Global posts Q2 loss as it winds down lending business

Heritage Global Inc. reported a $15.9 million net loss for the second quarter as the San Diego-based asset services company recorded more than $21 million in noncash charges tied to its decision to wind down its specialty lending business.

The company reported a loss of 46 cents per share for the three months ended June 30, compared with net income of $1.6 million, or 5 cents per share, in the same quarter a year earlier.

Heritage Global said the second-quarter results included about $18.2 million in noncash impairment charges and $3.5 million in provisions for credit losses related to the company's strategic decision to substantially exit Heritage Global Capital, its specialty lending operation.

The company reported revenue of $12.3 million, down from $14.3 million a year earlier.

Despite the quarterly loss, Heritage Global CEO Ross Dove said the company is shifting its focus toward its core, capital-light businesses.

"Our second quarter was shaped by our decision to substantially exit HGC -- a deliberate strategic move to focus our efforts on growing our core, capital-light businesses," he said in a statement. "While this decision comes with a significant one-time noncash impact, we believe that it is the right path forward, creating a stronger platform to grow long term shareholder value."

Operating results also declined sharply, with Heritage Global reporting an operating loss of $20.9 million, compared with operating income of $2.2 million in the second quarter of 2025.

Adjusted EBITDA, a measure that excludes certain expenses and other items, fell to $1.2 million from $2.8 million a year earlier.

The company said the charges were primarily related to write-downs of nonperforming loans and represented a significant one-time, noncash impact from its decision to wind down Heritage Global Capital.

For the first six months of 2026, Heritage Global reported revenue of $25 million, down from $27.8 million in the first half of 2025. The company posted a net loss of $15.2 million, or 44 cents per share, for the first half of 2026 compared with net income of $2.7 million, or 8 cents per share, in the same period last year.

Six-month adjusted EBITDA was $2.6 million, down from $4.4 million.

Heritage Global had $9.4 million in net working capital as of June 30, compared with $18.1 million at the end of 2025.

After the quarter ended, Heritage Global completed its acquisition of substantially all the assets of Boston Note & Mortgage III, also known as Boston Note Co. The transaction closed July 31.

Boston Note Co. is a seller-financed real estate note brokerage with more than 30 years of operating history. Heritage Global said the acquisition will expand its financial assets platform by adding a new origination channel and is expected to contribute revenue during the second half of 2026.

Dove said the acquisition, which will be incorporated into the company's DebtX business, is consistent with Heritage Global's strategy of expanding its capabilities across asset classes.

He also said the company's balance sheet remains strong enough to support additional growth and efforts to improve profitability.