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What changed in CBIZ, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CBIZ, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+341 added−270 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-23)

Top changes in CBIZ, Inc.'s 2024 10-K

341 paragraphs added · 270 removed · 217 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFinancial Services Benefits and Insurance Services National Practices Accounting and Tax Employee Benefits Consulting Information Technology Managed Networking and Hardware Services Financial Advisory Payroll / Human Capital Management Healthcare Consulting Valuation Property and Casualty Insurance Risk and Advisory Services Retirement and Investment Services Government Health Care Consulting 5 Table of Contents Financial Services Financial Services is comprised of core accounting services including traditional accounting, tax compliance, advisory, and specialty services, like transaction and risk advisory services, litigation support, valuation, and federal and state government health care compliance and consulting.
Biggest changeFinancial Services Benefits and Insurance Services National Practices Accounting and Tax Employee Benefits Consulting Information Technology Managed Networking and Hardware Services Financial Advisory Payroll / Human Capital Management National Technology Property and Casualty Insurance Government Health Care Consulting Retirement and Investment Services Financial Services The table below is a summary of examples of services provided through our Financial Services Practice Group: 6 Table of Contents Service Lines Examples of Services Offered Accounting and Tax • Traditional accounting • Transaction services • Tax compliance • Tax consulting • State and local tax Financial Advisory • Transaction advisory • Risk advisory • Forensic consulting & litigation • Financial accounting & advisory • Valuation National Technology • Cloud & infrastructure solutions • Cybersecurity, GRC & DFIR services • Enterprise performance & technology • Strategic IT consulting Government Health Care Consulting • Government health care compliance • Government health care consulting The leader for each service line reports to the President of the Financial Services Practice Group.
Under these ASAs, we provide a range of services to the CPA firms, including (but not limited to): administrative functions such as office management, bookkeeping and accounting; preparing marketing and promotional materials; providing office space, computer equipment, systems support and administrative and professional staff. Services are performed in exchange for a fee.
Under these ASAs, we provide a range of services to the CPA firms, including (but not limited to): administrative functions such as office management, bookkeeping and accounting; preparing marketing and promotional materials; and providing office space, computer equipment, systems support and administrative and professional staff. Services are performed in exchange for a fee.
Our corporate code of conduct, corporate governance guidelines, code of professional conduct and ethics guide and the charters of the Audit Committee, the Compensation and Human Capital Committee and the Nominating and Governance Committee of the Board of Directors are available on the investor relations page of our website, referenced above, and in print to any stockholder who requests them.
Our corporate code of conduct, corporate governance guidelines, code of professional conduct and ethics and the charters of the Audit Committee, the Compensation and Human Capital Committee and the Nominating and Governance Committee of the Board of Directors are available on the investor relations page of our website, referenced above, and in print to any stockholder who requests them.
Like most professional service companies, a large portion of our operating costs are relatively fixed in the short term, which generally results in higher operating margins in the first half of the year. Competition The professional business services industry is highly fragmented and competitive.
Like most professional service companies, a large portion of our operating costs are relatively fixed in the short term, which generally results in higher operating margins in the first half of the year. Competition The professional business service industry is highly fragmented and competitive.
We also have an ASA with Myers and Stauffer LC (“MSLC”), an independent national governmental health care consulting firm headquartered in Kansas City, Missouri. MSLC has fourteen equity members, all of whom are also our team members. MSLC maintains a five-member executive committee, none of whom hold senior officer positions at CBIZ.
We also have an ASA with Myers and Stauffer LC (“MSLC”), an independent national governmental health care consulting firm headquartered in Kansas City, Missouri. MSLC has 20 equity members, all of whom are also our team members. MSLC maintains a five-member executive committee, none of whom hold senior officer positions at CBIZ.
As such, we maintain joint-referral relationships and administrative service agreements (“ASAs”) with independent licensed Certified Public Accounting (“CPA”) firms (the “CPA firms”) under which audit and attest services may be provided to our clients by such CPA firms. At December 31, 2023, we maintained ASAs with four CPA firms.
As such, we maintain joint-referral relationships and administrative service agreements (“ASAs”) with independent licensed Certified Public Accounting (“CPA”) firms (the “CPA firms”) under which audit and attest services may be provided to our clients by such CPA firms. At December 31, 2024, we maintained ASAs with four CPA firms.
As a public company, we are subject to the provisions of the Sarbanes-Oxley Act of 2002 to reform the oversight of public company auditing, improve the quality and transparency of financial reporting by those companies and strengthen the independence of auditors.
As a public company, we are subject to the Sarbanes-Oxley Act of 2002 including the provisions intended to reform the oversight of public company auditing, improve the quality and transparency of financial reporting by those companies and strengthen the independence of auditors.
The ASAs have remaining terms ranging up to 22 years, are renewable upon agreement by both parties, and have certain rights of extension and termination.
The ASAs have remaining terms ranging up to 50 years, are renewable upon agreement by both parties, and have certain rights of extension and termination.
Accordingly, we do not hold any financial interest in an SEC-reporting attest client of an associated CPA firm, enter into any business relationship with an SEC-reporting attest client that the CPA firm performing an audit could not maintain, or sell any non-audit services to an SEC-reporting attest client that the CPA firm performing an audit could not sell, under the auditor independence limitations set out in the Sarbanes-Oxley Act of 2002 and other professional accountancy independence standards.
Accordingly, we do not hold any financial interest in an SEC-reporting attest client of an associated CPA firm, enter into any business relationship with an SEC-reporting attest client that the CPA firm performing an audit could not maintain, or provide any non-audit services to an SEC-reporting attest client that the CPA firm performing an audit could not provide, under the auditor independence limitations set out in the Sarbanes- 9 Table of Contents Oxley Act of 2002 and other professional accountancy independence standards.
As of December 31, 2023, we are in compliance with all governmental and professional organizations regulations relevant to the services we provide. 8 Table of Contents Liability Insurance We carry insurance policies, including those for commercial general liability, automobile liability, property, crime, professional liability, directors’ and officers’ liability, fiduciary liability, cyber liability, employment practices liability and workers' compensation, subject to prescribed state mandates.
As of December 31, 2024, we are in compliance with all governmental and professional organizations regulations relevant to the services we provide. Liability Insurance We carry insurance policies, including those for commercial general liability, automobile liability, property, crime, professional liability, directors’ and officers’ liability, fiduciary liability, cyber liability, employment practices liability and workers' compensation, subject to prescribed state mandates.
We and the CPA firms with which we are associated have implemented policies and procedures designed to enable us and the CPA firms to maintain independence and freedom from conflicts of interest in accordance with applicable standards.
We and the CPA firms with which we maintain ASAs have implemented policies and procedures designed to enable us and the CPA firms to maintain independence and freedom from conflicts of interest in accordance with applicable standards.
Fees earned by us under the ASAs are recorded as revenue in the accompanying Consolidated Statements of Comprehensive Income and totaled approximately $259.6 million, $235.4 million and $174.8 million for the years ended December 31, 2023, 2022 and 2021, respectively, a majority of which is related to services rendered to privately-held clients and governmental agencies.
Fees earned by us under the ASAs are recorded as revenue in the accompanying Consolidated Statements of Comprehensive Income and totaled approximately $306.5 million, $259.6 million and $235.4 million for the years ended December 31, 2024, 2023 and 2022, respectively, a majority of which is related to services rendered to privately-held clients and governmental agencies.
In 2023, CBIZ was certified as a Great Place to Work® for the eighth consecutive year and has been honored with numerous workplace awards based on feedback gathered directly from our team members.
In 2024, CBIZ was certified as a Great Place to Work® for the ninth consecutive year and has been honored with numerous workplace awards based on feedback gathered directly from our team members.
Given the policies set by us on our relationships with SEC-reporting attest clients of associated CPA firms, and the limited number and size of such clients, the Sarbanes-Oxley Act of 2002 independence limitations do not, and are not expected to, materially affect our revenues.
Given the policies set by us on our relationships with SEC-reporting attest clients of associated CPA firms, and the limited number and size of such clients, the Sarbanes-Oxley Act of 2002 independence limitations do not, and are not expected to, materially affect our financial position and results of operation.
Cross-serving opportunities are identified by our professionals and then through internal coordination, we can offer a more comprehensive solution that may engage different business service lines.
Cross-serving opportunities are identified by our professionals and then through internal coordination, we can offer a more comprehensive solution that may engage different business service 8 Table of Contents lines.
We believe the protection of human rights is fundamental to conducting great business, and believe we have both the ability and responsibility to drive positive change through our culture and business practices.
We believe the protection of human rights is fundamental to conducting great business, and believe we have both the ability and responsibility to drive positive change through our culture and business practices. We are proud to prioritize learning within our culture.
With respect to CPA firm clients that are required to file audited financial statements with the SEC, the SEC staff views us and the CPA firms with which we have contractual relationships as a single entity in applying independence rules established by the accountancy regulators and the SEC.
With respect to CPA firm clients that are required to file audited financial statements with the SEC, the SEC staff views us and the CPA firms with which we maintain ASAs as a single entity in applying independence rules established by the SEC.
Mayer Hoffman maintains a nine member Board of Directors. There are no board members of Mayer Hoffman who hold senior officer positions at CBIZ. Our association with Mayer Hoffman offers clients access to the multi-state resources and expertise of a national CPA firm.
CBIZ CPAs has 471 stockholders as of December 31, 2024. CBIZ CPAs maintains a nine member Board of Directors. There are no board members of CBIZ CPAs who hold senior officer positions at CBIZ. Our association with CBIZ CPAs offers clients access to the multi-state resources and expertise of a national CPA firm.
Year End December 31, 2023 2022 2021 Financial Services $ 1,160,686 72.9 % $ 1,010,068 71.5 % $ 734,026 66.4 % Benefits and Insurance Services 382,605 24.1 % 358,007 25.4 % 332,323 30.1 % National Practices 47,903 3.0 % 43,904 3.1 % 38,576 3.5 % Total CBIZ revenue $ 1,591,194 100.0 % $ 1,411,979 100.0 % $ 1,104,925 100.0 % Our revenue growth model includes three components: internal organic growth, cross-serving additional services to our existing clients, and strategic acquisitions. • We capitalize on organic growth opportunities by creating value for our clients to help them achieve their goals, take advantage of their greatest opportunities or address their biggest challenges.
Year End December 31, 2024 % 2023 % 2022 % Financial Services $ 1,362,539 75.1 % $ 1,160,686 73.0 % $ 1,010,068 71.5 % Benefits and Insurance Services 401,048 22.1 % 382,605 24.0 % 358,007 25.4 % National Practices 49,885 2.8 % 47,903 3.0 % 43,904 3.1 % Total CBIZ revenue $ 1,813,472 100.0 % $ 1,591,194 100.0 % $ 1,411,979 100.0 % Our revenue growth model includes three components: internal organic growth, cross-serving additional services to our existing clients, and strategic acquisitions. • We capitalize on organic growth opportunities by creating value for our clients to help them achieve their goals, take advantage of their greatest opportunities or address their biggest challenges.
In 2023, we completed five business acquisitions. From time to time, we divest, through sale or closure, business operations that do not contribute to our long-term objectives for growth or are not critical to our service offerings or markets. In 2023, we sold one technology asset in the Financial Services practice group.
In 2024, we completed five business acquisitions. From time to time, we divest, through sale or closure, business operations that do not contribute to our long-term objectives for growth or are not critical to our service offerings or markets.
Revenue Revenue by practice group for the years ended December 31, 2023, 2022 and 2021 is provided in the table below (in thousands) along with a discussion of certain external relationships and regulatory factors that currently impact those segments.
We have been serving this client in the United States and Canada for more than 20 years. Revenue Revenue by practice group for the years ended December 31, 2024, 2023 and 2022 is provided in the table below (in thousands) along with a discussion of certain external relationships and regulatory factors that currently impact those segments.
CBIZ recruiters cultivate relationships to establish strong networks of candidates, and are full life-cycle recruiters who stay with their candidates from first contact through their first 60 days as a CBIZ team member.
Our team consistently and fairly utilizes best practices and various recruiting tools to source top talent. CBIZ recruiters cultivate relationships to establish strong networks of candidates, and are full life-cycle recruiters who stay with their candidates from first contact through their first 60 days as a CBIZ team member.
N., Suite 600, Independence, Ohio 44131, and our telephone number is (216) 447-9000. Our website is located at https://www.cbiz.com .
Available Information Our principal executive office is at 5959 Rockside Woods Blvd. N., Suite 600, Independence, Ohio 44131, and our telephone number is (216) 447-9000. Our website is located at https://www.cbiz.com .
Most of the members and/or stockholders of those CPA firms are also our team members, and we render services to the CPA firms as an independent contractor. One of our ASAs is with Mayer Hoffman McCann, P.C. (“Mayer Hoffman”), an independent national CPA firm headquartered in Kansas City, Missouri. Mayer Hoffman has 211 stockholders.
Most of the members and/or stockholders of those CPA firms are also our employees, and we render services to the CPA firms as an independent contractor. One of our ASAs is with CBIZ CPAs, formerly known as Mayer Hoffman McCann, P.C., an independent national CPA firm headquartered in New York, NY.
The leader of each service line reports to the President of Financial Services. Restrictions imposed by independence requirements and state accountancy laws and regulations preclude us from rendering audit and attest services (other than internal audit services).
Restrictions imposed by independence requirements and state accountancy laws and regulations preclude us from rendering audit and attest services (other than internal audit services).
In 2023, CBIZ was awarded 100 workplace awards, including the following: • 2023 Top Workplaces USA by Energage – This award celebrates nationally recognized companies that make the world a better place to work together by prioritizing a people-centered culture and giving employees a voice.
In 2024, CBIZ was awarded 106 workplace awards, including the following: • 2024 USA Today Top Workplaces 11 Table of Contents • America's Most Recommended Tax and Accounting Firms - USA Today • America's Best Mid-Size Companies - Time • Top 100 Firms - Accounting Today • 2024 Top Workplaces Financial Services by Energage – This award celebrates nationally recognized Financial Services companies that make the world a better place to work together by prioritizing a people-centered culture and giving employees a voice.
Although the ASAs do not constitute control, we are one of the beneficiaries of the agreements and may bear certain economic risks. As such, the CPA firms with which we maintain ASAs qualify as variable interest entities. Refer to Note 1, Basis of Presentation and Significant Accounting Policies, to the accompanying consolidated financial statements for further discussion.
We have determined that because we may bear certain economic risks through our relationships with CPA firms with whom we maintain ASAs, the CPA firms qualify as variable interest entities ("VIEs"), and we are the primary beneficiary of the VIEs. Refer to Note 1, Basis of Presentation and Significant Accounting Policies, to the accompanying consolidated financial statements for further discussion.
We pursue acquisitions to enter attractive geographic markets, strengthen our presence in an existing market, add services or deepen our expertise for our existing offerings, expand into higher growth industries and services niches and access top talent.
CBIZ pursues highly regarded organizations that help the Company enter attractive geographic markets, strengthen its presence in an existing market, add services or deepen expertise for existing offerings, expand into higher growth industries, and access top talent.
We were recognized for this award based on core focus areas such as leadership and planning, corporate culture, communications, work environment and overall engagement with our employees. • 2023 Best and Brightest Companies in the Nation Top 101 by National Association of Business Resources ("NABR") – For the eighth year in a row, CBIZ was honored as a “Best and Brightest Company” based on our commitment to human resource practices and employee enrichment. • 2023 Best and Brightness in Wellness by NABR – CBIZ was honored for the seventh consecutive time, as an organization that promotes a culture of wellness. • 2023 Top Workplaces Culture Excellence Awards for Appreciation, Clue-in Leaders, Employee Value Proposition, Employee Wellbeing, Empowering Employees, Formal Training, Professional Development, Work-Life Flexibility by Energage – CBIZ was recognized for the third time as an outstanding organization across business-relevant culture categories.
We were recognized for this award based on core focus areas such as leadership and planning, corporate culture, communications, work environment and overall engagement with our employees. • 2024 Best and Brightest Companies in the Nation Top 101 by National Association of Business Resources ("NABR") – For the ninth year in a row, CBIZ was honored as a “Best and Brightest Company” based on our commitment to human resource practices and employee enrichment.
The CPA firms with which we maintain ASAs may operate as limited liability companies, limited liability partnerships or professional corporations. The firms are separate legal entities with separate governing bodies and officers. Neither the existence of the ASAs nor the providing of services thereunder constitutes control of the CPA firms by us.
The CPA firms with which we maintain ASAs may operate as limited liability companies, limited liability partnerships or professional corporations. The CPA firms are separate legal entities with separate governing bodies and officers. The Company and the CPA firms maintain their own respective liability and risk of loss in connection with the performance of their respective services.
The aggregate compensation related to these arrangements received during the years ended December 31, 2023, 2022 and 2021 was less than 2% of consolidated CBIZ revenue for the respective periods. National Practices Our National Practices group provides two services: information technology focusing on managed networking and hardware services and healthcare consulting.
The aggregate compensation related to these arrangements received during the years ended December 31, 2024, 2023 and 2022 was approximately 1% of consolidated CBIZ revenue for the respective periods. National Practices Our National Practices group provides managed networking and hardware services to a single client based on a cost-plus contract which expires on December 31, 2028.
CBIZ was recognized for best practices in financial education and communication surrounding defined contribution plans in the plan transitions category. • 2023 Best Places to Work in Insurance by Business Insurance Magazine – CBIZ was selected and honored for the ninth consecutive year as a “Best Places to Work in Insurance” based on our commitment to attracting, developing and retaining great talent through employee benefits and other programs.
This award is based entirely on feedback from our team members. • Best Workplaces in Financial Services and Insurance - Fortune • 2024 Best Places to Work in Insurance by Business Insurance Magazine – CBIZ was selected and honored for the tenth consecutive year as a “Best Places to Work in Insurance” based on our commitment to attracting, developing and retaining great talent through employee benefits and other programs.
In the event that accounts receivable and unbilled work in process become uncollectible by the CPA firms, the service fee due to us is typically reduced on a proportional basis. Refer to Note 1, Basis of Presentation and Significant Accounting Policies, to the accompanying consolidated financial statements for further discussion.
In the event that accounts receivable and unbilled work in process become uncollectible by the CPA firms, the service fee due to us is typically reduced on a proportional basis such that the Company is exposed to losses that create a variable interest.
Regulation Our operations are subject to regulation by federal, state, local and professional governing bodies. Accordingly, our business services may be impacted by legislative changes by these bodies, particularly with respect to provisions relating to payroll, benefits administration and insurance services, pension plan administration and tax and accounting.
Accordingly, our business services may be impacted by legislative changes by these bodies, particularly with respect to provisions relating to payroll, benefits administration and insurance services, pension plan administration and tax and accounting. We remain abreast of regulatory changes affecting our business, as these changes often affect clients’ activities with respect to employment, taxation, benefits, and accounting.
We remain abreast of regulatory changes affecting our business, as these changes often affect clients’ activities with respect to employment, taxation, benefits, and accounting. For instance, changes in income, estate, or property tax laws may require additional consultation with clients subject to these changes to assist these clients to comply with revised regulations.
For instance, changes in income, estate, or property tax laws may require additional consultation with clients subject to these changes to assist these clients to comply with revised regulations.
CBIZ is proud of its efforts to be a learning organization that provides opportunities for education, technical training, professional development, leadership development, coaching, and mentoring at every step in a team member's career. These opportunities are offered through in-person, virtual and on-demand programs. Most recently, CBIZ expanded our mentoring program to provide opportunities to team members.
Our approach includes a comprehensive framework of technical and skills training, professional and leadership development, experiential learning, coaching, mentoring and specialized programs at every step in a team member's career. These opportunities are offered through in-person, virtual and on-demand programs.
We are not permitted to perform audits, reviews, compilations, or other attest services, do not contract to perform them and do not provide the associated attest reports. Given this legal prohibition and course of conduct, we do not believe it is likely that we would bear the risk of litigation losses related to attest services provided by the CPA firms.
Furthermore, we do not believe that it is likely that we would bear the risk of litigation losses related to attest services provided by the CPA firms.
Our recruitment team sources candidates through proactive research across multiple channels including professional associations, career websites, community organizations and social media networks, as well as schools, universities and institutions with a special emphasis on those entities that attract a diverse population.
Our recruitment team sources candidates through proactive research across multiple channels including professional associations, career websites, community organizations and social media networks, as well as schools, universities and institutions. As our team members are our best ambassadors, we also leverage employee referrals as another essential component of our recruitment strategy.
Our business client base is geographically dispersed across the country and includes small, middle market, and large businesses and organizations ranging from less than 10 to more than 10,000 employees. Our largest client generated approximately 2.3% of our consolidated revenue in 2023 and is included in the National Practices group.
Clients We provide multi-disciplinary and comprehensive solutions and professional services to over 135,000 clients across more than 25 industries. Our business client base is geographically dispersed across the country and includes small, middle-market, and large businesses and organizations ranging from less than 10 to more than 10,000 employees.
We are also embedded in local and regional markets and build meaningful relationships to foster deeper understanding of our clients’ businesses and industries. We believe that our strong client relationships, breadth of professional service offerings, and depth of expertise, as well as our ability to provide national expertise on a local level give us a competitive advantage.
We embed ourselves in local and regional markets, building meaningful relationships to better understand our clients' businesses and industries. We believe our strong client relationships, wide range of professional service solutions, data-driven expertise, and ability to deliver client-specific innovative insights give us a competitive advantage.
The Company and the CPA firms maintain their own respective liability and risk of loss in connection with the performance of their respective services. Attest services are not permitted to be performed by any individual or entity that is not licensed to do so.
Attest services are not permitted to be performed by any individual or entity that is not licensed to do so. We are not permitted to perform audits, reviews, compilations, or other attest services, do not contract to perform them and do not provide the associated attest reports.
Management believes that the diversity of our client base helps insulate us from a downturn in a particular 7 Table of Contents industry or geographic market. Nevertheless, economic conditions among select clients and groups of clients may have an impact on the demand for the services that we provide.
Nevertheless, economic conditions among select clients and groups of clients may have an impact on the demand for the services that we provide. Regulation Our operations are subject to regulation by federal, state, local and professional governing bodies.
Benefits and Insurance Services Benefits and Insurance Services provides brokerage and consulting expertise for group health benefits and property and casualty insurance in addition to retirement plan advisory and investment services, payroll, human capital management, and other related services. The leader for each service line reports to the President of Benefits and Insurance Services.
Benefits and Insurance Services The table below is a summary of examples of services provided through our Benefit and Insurance Services Practice Group: 7 Table of Contents Service Lines Examples of Services Offered Employee Benefit Consulting • Benefit consulting • Benefit administration • Actuarial services Payroll / Human Capital Management • Payroll services • Total rewards data analytics • Full HCM solution • Talent and compensation consulting Property and Casualty Insurance • Property and casualty insurance brokerage • Risk management services • Program and specialty insurance brokerage • Individual insurance brokerage Retirement and Investment Services • Retirement plan consulting • Retirement plan administration • Retirement investment services • Actuarial services The leader for each service line reports to the President of Benefits and Insurance Services practice group.
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ITEM 1. BUSINESS Overview CBIZ, Inc. is a leading national provider of financial, insurance and advisory services designed to help our clients and their businesses grow and succeed.
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ITEM 1. BUSINESS Overview CBIZ, Inc. (NYSE: CBZ) is a leading professional services advisor to middle-market businesses and organizations nationwide. With industry knowledge and expertise in accounting, tax, advisory, benefits, insurance, and technology, CBIZ delivers forward-thinking insights and actionable solutions to help clients anticipate what is next and discover new ways to accelerate growth.
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Founded on the simple idea that growing businesses of all sizes wanted and needed access to best in class professional services with a personalized, local approach, CBIZ is now one of the largest accounting, insurance brokerage, financial and advisory services providers in the country.
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CBIZ remains one of the country's largest accounting, insurance, brokerage, and advisory providers. Following the acquisition of Marcum LLP in 2024 (the "Transaction"), CBIZ has grown to a team of more than 10,000 team members across more than 160 locations in 22 major markets coast to coast.
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Over the years, CBIZ has grown to a team of more than 6,700 professionals working through more than 120 offices located in 33 states and the District of Columbia.
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Business Strategy Since the Company’s founding in 1996, CBIZ has been committed to building an organization that offers unparalleled services and expertise across its industries, addressing its clients' most critical, time-sensitive needs while delivering forward-thinking solutions based on innovative Company insights. A key component of the Company’s strategy is growth by acquisition.
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Shares of our common stock are traded on the New York Stock Exchange (“NYSE”) under the symbol “CBZ.” Business Strategy Since our founding in 1996, CBIZ set out to build a company that would provide a breadth of services and depth of expertise that is unmatched in our industries to assist our clients' with their most pressing needs and greatest opportunities.
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The Company has a long history and proven track record of integrating organizations that seek a more significant national platform and enhanced client service capabilities, possess strong leadership, and represent a cultural fit. In July 2024, CBIZ announced the acquisition of Marcum representing the largest transaction in the Company’s history.
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CBIZ pursued this vision by establishing a national platform of core services that our clients rely on to support their day-to-day business. Our core services include accounting, tax, government health care consulting, employee benefits, property and casualty insurance, payroll, human capital management, retirement plan services and a host of similar services.
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That acquisition closed in November 2024, augmenting the Company’s breadth of services and depth of expertise, making the combined entity the largest professional services provider of its kind in the U.S. With industry knowledge and expertise in accounting, tax, advisory, benefits, insurance, and technology, CBIZ is now able to deliver even more insights and actionable solutions to clients.
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Over time, CBIZ strengthened this model by adding advisory services that help our clients with specialized needs they may have from time to time. These services include financial advisory, transaction advisory, risk advisory, valuation, technical accounting, litigation support, preparation for IPO, actuarial, executive search and compensation consulting services.
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CBIZ’s people are its key differentiator and competitive advantage. Our team members are committed to our clients’ success and take pride in their deep and longstanding relationships. They provide national resources, expertise, and technical depth through local delivery and support.
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This combination of the core essential services our clients rely on us to provide on a regular basis and the more specialized advisory services that our clients need from time to time are fundamental to our ability to perform well in both favorable and less favorable business climates. Acquisitions are a key part of our growth strategy.
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CBIZ continues to focus on creating a culture that helps it attract and retain top talent and on being an employer of choice. It has received national recognition for doing just that. In 2024, the Company received a record 106 workplace awards from local, national, and industry publications and organizations.
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We seek to acquire the most highly regarded, best in class financial, insurance, and advisory firms that demonstrate a desire for a greater national platform and enhanced client service capabilities, possess strong leadership, cultural fit and a client base with cross-serving potential. Available Information - Our principal executive office is located at 5959 Rockside Woods Blvd.
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Refer to Note 1, Basis of Presentation and Significant Accounting Policies, to the accompanying consolidated financial statements for further discussion.
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Although the ASAs do not constitute control, we are one of the beneficiaries of the agreements and may bear certain economic risks. As such, the CPA firms with which we maintain ASAs qualify as variable interest entities.
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As a leading national provider of professional services to middle market businesses, we provide a breadth of services and depth of expertise by most competitors. We combine these service offerings with a strong commitment to exceptional client service and building meaningful client relationships. • Cross-serving provides us with the opportunity to offer and deliver multiple services to our existing clients.
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The information technology business has been serving one client in the United States and Canada for more than 20 years. 6 Table of Contents The healthcare consulting business, with expertise in revenue management, reimbursement optimization and managed care contracting, serves hospitals and other healthcare providers.
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In 2024, we sold CBIZ KA Consulting Services, LLC, which was a component of our National Practice group, and one business unit in the Financial Services practice group. For further discussion regarding acquisitions, refer to Note 2, Business Combinations, to the accompanying consolidated financial statements.
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We focus on building long-term relationships with our clients. We do this by offering our clients a personalized service experience that is backed by national resources.
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Our largest client generated approximately 2.3% of our consolidated revenue in 2024 and is included in the National Practices group. Management believes that the diversity of our client base helps insulate us from a downturn in a particular industry or geographic market.
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This approach enables our clients to access a breadth of services and depth of expertise typically not available through smaller, regional professional services providers but with a more tailored client experience than what is delivered by many national firms.
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All of our administrative and professional staff who are provided to such CPA firms work under the sole direction, supervision, and control of the particular CPA firm, and we do not control how any attest work is conducted.
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Our ability to coordinate services and offer more comprehensive solutions enables us to provide additional value to our clients. • Cross-serving provides us with the opportunity to offer and deliver multiple services to our existing clients.
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Given this legal prohibition, course of conduct, and policies and procedures related to the performance of attest work, we do not believe that either the existence of the ASAs or the providing of services thereunder constitutes organizational or legal control of the CPA firms by us.
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For further discussion regarding acquisitions and divestitures, refer to Note 18, Business Combinations, to the accompanying consolidated financial statements. Clients We provide multi-disciplinary and comprehensive solutions and professional services to over 100,000 clients across more than 25 industries. Our client base is made up of approximately 60,000 business clients and 40,000 individual clients.
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We compete with global, national, and local professional service firms, such as accounting and tax firms, consulting firms, insurance brokers, and payroll advisors. Unlike many competitors focusing on single-service offerings, we provide multi-disciplinary, actionable solutions designed to deliver forward-thinking insights and drive growth, eliminating a client's need to coordinate between multiple service providers.
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We compete with national, regional and local professional services firms including accounting and tax firms, insurance brokers, payroll advisors and consulting firms.
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Human Capital 10 Table of Contents Human capital is our most important asset as a professional services provider as the expertise, experience and human intelligence of our team members directly drives our services and solutions. The ability to attract, develop, and retain top talent is essential for bringing value to our clients, fostering innovation and building meaningful client relationships.
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While many of our competitors tend to be mono-line in their offerings, we offer multi-disciplinary, holistic solutions that we believe are comprehensive and provide higher value to our clients while eliminating the need for coordination between multiple service providers.
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Our success and continued growth depend on a highly skilled and agile workforce to provide multi-disciplinary and technology-enabled solutions that respond to the complexity and uncertainty of today’s business environment. Our team members share a commitment to exceptional client service coupled with deep industry knowledge and the ability to leverage data to produce actionable insights.
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Human Capital At CBIZ, our value proposition to our clients is the breadth of our services and the depth of our expertise, including our unique ability to provide multi-disciplinary, coordinated solutions that respond to the complexity and uncertainty of today’s business environment.
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With over 10,000 team members nationwide, we prioritize our culture and invest in continuous learning, leadership development, and operational excellence to sustain our long-term growth.
Removed
CBIZ brings value because of the talent, expertise and commitment of the over 6,700 professionals that make up our team nationwide. We are diligent in our efforts to attract, retain and develop talent.
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Our recruitment strategy is designed to attract and retain top talent by offering a compelling employee value proposition that emphasizes a clear career path, comprehensive learning and development including a focus on upskilling to remain future ready, and a supportive and inclusive work environment.
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Recruitment is managed at the national level and supported by national and local resources based on a process that consistently and fairly utilizes best practices and various recruiting tools to source top talent.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeGiven the pre-existing limits set by us on our relationships with SEC-reporting attest clients of associated CPA firms, and the limited number and size of such clients, the imposition of independence limitations under the Sarbanes-Oxley Act of 2002, SEC rule or interpretation, or PCAOB standards do not and are not expected to materially affect our revenues. 11 Table of Contents There can be no assurance that following the policies and procedures implemented by us and the CPA firms will enable us and the CPA firms to avoid circumstances that would cause us and them to lack independence from an SEC-reporting attest client; nor can there be any assurance that state, United States Government Accountability Office or United States Department of Labor accountancy authorities will not impose additional restrictions on the profession.
Biggest changeThere can be no assurance that following the policies and procedures implemented by us and the CPA firms will enable us and the CPA firms to avoid circumstances that would cause us and them to lack independence from an SEC-reporting attest client; nor can there be any assurance that state, United States Government Accountability Office or United States Department of Labor accountancy authorities or other accountancy authorities will not impose additional restrictions on the profession.
Moreover, courts outside of such jurisdictions are at times reluctant to enforce such covenants. In light of the competitive employment environment and risks related to the enforcement of restrictive covenants, we cannot assure you that we will be able to retain the services of such personnel.
Moreover, courts outside of such jurisdictions are at times reluctant to enforce such restrictive covenants. In light of the competitive employment environment and risks related to the enforcement of restrictive covenants, we cannot assure you that we will be able to retain the services of such personnel.
The widespread outbreak of a communicable illness or any other public health crisis could adversely affect our business, results of operations and financial condition. We may face risks related to public health threats or widespread outbreak of a communicable illness.
The widespread outbreak of a communicable illness or any other public health crisis could adversely affect our business, financial condition and results of operations. We may face risks related to public health threats or widespread outbreak of a communicable illness.
We make risk-based decisions on the measures to implement, and we believe we have appropriate controls and procedures in place to address our fiduciary responsibility and mitigate these risks. However, if we are not successful in managing these risks, our business, financial condition, and results of operations may be harmed in the future.
We make risk-based decisions on the measures to implement, and we believe we have appropriate controls and procedures in place to address our fiduciary responsibility and mitigate these risks. However, if we are not successful in managing these risks, our business, financial condition, and results of operations may could be harmed in the future.
If we are unable to compete effectively, our business, financial condition and results of operations may be negatively impacted. We face competition from a number of sources in the business services industry. Many of our competitors are large companies that may have greater financial, technical, marketing and other resources.
If we are unable to compete effectively, our business, financial condition and results of operations could be negatively impacted. We face competition from a number of sources in the business services industry. Many of our competitors are large companies that may have greater financial, technical, marketing and other resources.
In addition, we cannot be certain that the different insurance carriers which provide errors and omissions coverage for different lines of our business will not dispute their obligation to cover a particular claim.
In addition, we cannot be certain that the different insurance carriers that provide errors and omissions coverage for different lines of our business will not dispute their obligation to cover a particular claim.
Our ability to provide non-attest services to clients that receive attest services from the associated CPA firms may be contingent on our ability to extend the ASAs as they expire, and the ability and willingness of the firms to retain their attest clients.
Our ability to provide non-attest services to clients that receive attest services from the CPA firms may be contingent on our ability to extend the ASAs as they expire, and the ability and willingness of the CPA firms to retain their attest clients.
Volatility in interest rates from monetary policy or economic conditions could increase expenses, cause uncertainty and impact our ability to pay interest on our indebtedness. Refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, for further information regarding interest rate risk.
Volatility in interest rates from monetary policy or economic conditions could increase interest expense, cause uncertainty and impact our ability to pay interest on our indebtedness. Refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, for further information regarding interest rate risk.
However, applicable professional standards generally permit us to provide additional services to privately-held companies, in addition to those services which may be provided to SEC-reporting attest clients of a CPA firm. We and the CPA firms have implemented policies and procedures designed to enable us to maintain independence and freedom from conflicts of interest in accordance with applicable standards.
Applicable professional standards generally permit us to provide additional services to privately-held companies, in addition to those services that may be provided to SEC-reporting attest clients of a CPA firm. We and the CPA firms have implemented policies and procedures designed to enable us to maintain independence and freedom from conflicts of interest in accordance with applicable standards.
Although we have disaster recovery procedures in place and insurance to protect against such contingencies, we cannot be sure that insurance or these services will continue to be available, cover all our losses or compensate us for the possible loss of clients occurring during any period that we are unable to provide business services.
Although we have disaster recovery procedures in place and insurance to 19 Table of Contents protect against such contingencies, we cannot be sure that insurance or these services will continue to be available, cover all our losses or compensate us for the possible loss of clients occurring during any period that we are unable to provide business services.
Future public health threats or widespread outbreaks of communicable illnesses could have a material adverse effect on our results of operations, financial condition, and liquidity, and will depend on numerous factors that we may not be able to predict, including, but not limited to, the duration and severity of the public health threat or pandemic, governmental actions in response to the public health threat or pandemic, the impact of business and economic disruptions on our clients and their demand for our services, and our clients’ ability to pay for our services.
Future public health threats or widespread outbreaks of communicable illnesses could have a material adverse effect on our business, financial condition, and results of operations, and will depend on numerous factors that we may not be able to predict, the duration and severity of the public health threat or pandemic, governmental actions in response to the public health threat or pandemic, the impact of business and economic disruptions on our clients and their demand for our services, and our clients’ ability to pay for our services.
Our failure to satisfy covenants in our debt instruments could cause a default under those instruments. Our debt instruments include a number of covenants relating to financial ratios and tests. Our ability to comply with 16 Table of Contents these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions.
Our failure to satisfy covenants in our debt instruments could cause a default under those instruments. Our debt instruments include a number of covenants relating to financial ratios and tests. Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions.
Cyber-attacks or other security breaches involving our computer systems or the systems of one or more of our vendors could materially and adversely affect our business. Our systems, like others in the industries we serve, are vulnerable to cybersecurity risks, and we are subject to potential disruption caused by such activities.
Cyberattacks or other security breaches involving our computer systems or the systems of one or more of our vendors could materially and adversely affect our business. Our systems, like others in the industries we serve, are vulnerable to cybersecurity risks, and we are subject to potential disruption caused by such activities.
Our inability to attract and retain necessary personnel to support our growth could have a material adverse effect on our business, financial condition and results of operations.
Our inability to attract and retain necessary personnel to support our current operations and further growth could have a material adverse effect on our business, financial condition and results of operations.
In addition, we may face increased competition for acquisition opportunities, which may inhibit our ability to complete transactions on terms that are favorable to us. As discussed below, there are certain provisions under the 2022 credit facility (as defined below) that may limit our ability to acquire additional businesses.
In addition, we may face increased competition for acquisition opportunities, which may inhibit our ability to complete transactions on terms that are favorable to us. As discussed below, there are certain provisions under the 2024 Credit Facilities (as defined below) that may limit our ability to acquire additional businesses.
Specifically, legislation or other changes could afford our clients and their employees the ability to seek insurance coverage through other means, including, but not limited to, direct access with insurance carriers or other similar avenues, which could eliminate or adversely alter the remuneration brokers receive from insurance carriers for their services.
Specifically, legislation or other changes could afford our clients and their employees the ability to seek insurance coverage through other means direct access with insurance carriers or other similar avenues, which could eliminate or adversely alter the remuneration brokers receive from insurance carriers for their services.
We could incur significant legal expense to defend any claims against us, even those claims that we believe are without merit. While we carry insurance against these potential liabilities, we cannot be certain that circumstances surrounding such an error or breach of security would be entirely reimbursed through insurance coverage.
We could incur significant legal expense to defend any claims against us, even those claims that we believe are without merit and against which we believe we have substantial defenses. While we carry insurance against these potential liabilities, we cannot be certain that circumstances surrounding such an error or breach of security would be entirely reimbursed through insurance coverage.
Although to date such issues have not resulted in material disruptions or materially affected our business strategy, results of operations or financial condition, no assurance can be provided that we will not experience material disruptions or suffer material adverse effects in the future if our third-party vendors do not maintain adequate security measures, do not require their sub-contractors to 13 Table of Contents maintain adequate security measures, do not perform as anticipated and in accordance with contractual requirements, or become targets of cyber-attacks.
Although to date such issues have not resulted in material disruptions or materially affected our business, financial condition, or results of operations, no assurance can be provided that we will not experience material disruptions or suffer material adverse effects in the future if our third-party vendors do not maintain adequate security measures, do not require their sub-contractors to maintain adequate security measures, do not perform as anticipated and in accordance with contractual requirements, or become targets of cyberattacks.
Strategic acquisitions are part of our growth strategy, and it is our intention to selectively acquire businesses or client lists that are complementary to existing service offerings in our target markets and/or new and attractive markets.
Strategic acquisitions are part of our overall business growth strategy, and it is our intention to selectively acquire businesses or client lists over time that are complementary to existing service offerings in our target markets and/or new and attractive markets.
For example, the 2022 credit facility may (i) restrict our ability to repurchase or redeem our capital stock or debt, or merge or consolidate with another entity; (ii) limit our ability to borrow additional funds or to obtain other financing in the future for working capital, capital expenditures, acquisitions, investments and general corporate purposes; (iii) limit our ability to dispose of our assets, to create liens on our assets, to extend credit or to issue dividends to our stockholders; and (iv) make us more vulnerable to economic downturns and reduce our flexibility in responding to changing business and economic conditions.
For example, the 2024 Credit Facilities contain covenants that could (i) restrict our ability to repurchase or redeem our capital stock or debt, or merge or consolidate with another entity; (ii) limit our ability to borrow additional funds or to obtain other financing in the future for working capital, capital expenditures, acquisitions, investments and general corporate purposes; (iii) limit our ability to dispose of our assets, to create liens on our assets, to extend credit or to issue dividends to our stockholders; and (iv) make us more vulnerable to economic downturns and reduce our flexibility in responding to changing business and economic conditions.
We may fail to realize the anticipated benefits of acquisitions, or they may prove disruptive and could result in the combined business failing to meet our expectations. The success of our acquisitions will depend, in part, on our ability to successfully integrate acquired businesses with current operations.
We may fail to realize the anticipated benefits of acquisitions, or they may prove disruptive and could result in the combined business failing to meet our expectations. The success of our acquisitions, including the success of our recent acquisition of Marcum pursuant to the Transaction, will depend, in part, on our ability to successfully integrate acquired businesses with current operations.
Restrictions imposed by independence requirements and conflict of interest rules, as well as the nature and terms of the ASAs, may limit our ability to provide services to clients of the attest firms with which we have contractual relationships and the ability of such attest firms to provide attestation services to our clients.
Restrictions imposed by independence requirements and conflict of interest rules, as well as the nature and terms of our current Administrative Service Agreements, limit our ability to provide services to clients of the attest firms with which we have contractual relationships and the ability of such attest firms to provide attestation services to our clients.
In addition, the stock market in general has experienced volatility that often has been unrelated to the operating performance of companies such as ours. These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
In addition, the stock market in general has experienced volatility that often has been unrelated to the operating performance of companies such as ours. These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance.
We cannot be sure when sales by holders of our stock will occur, how many shares will be sold or the effect that sales may have on the market price of our common stock. Our principal stockholders may have substantial control over our operations.
We cannot be sure when sales by holders of our stock will occur, how many shares will be sold or the effect that sales may have on the market price of our common stock.
We are subject to risk as it relates to software that we license from third parties. We license software from third parties, much of which is integral to our systems and our business. The licenses are generally terminable if we breach our obligations under the license agreements.
We license software from third parties, much of which is integral to our systems and our business. The licenses are generally terminable if we breach our obligations under the license agreements.
In the event that we are not in compliance with certain covenants as specified in the 2022 credit facility, we could be restricted from making acquisitions, restricted from borrowing funds from the 2022 credit facility for other uses, or required to pay down the outstanding balance on the line of credit.
In the event that we are not in compliance with certain covenants as specified in the 2024 Credit Facilities, we could be restricted from making acquisitions, restricted from borrowing funds from the Term Loan and Revolving Credit Facility (as defined below) for other uses, or required to pay down the outstanding balance on the line of credit.
Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us under the 2022 credit facility in an amount sufficient to enable us to fund our other liquidity needs.
Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us under the 2024 Credit Facilities in an amount sufficient to enable us to fund our other liquidity 21 Table of Contents needs.
Terms of the 2022 credit facility may adversely affect our ability to run our business and/or reduce stockholder returns. The terms of the 2022 credit facility, as well as the guarantees of our subsidiaries, could impair our ability to operate our business effectively and may limit our ability to take advantage of business opportunities.
Terms of the 2024 Credit Facilities could adversely affect our ability to run our business and/or reduce stockholder returns. The terms of the 2024 Credit Facilities could impair our ability to operate our business effectively and may limit our ability to take advantage of business opportunities.
Any impairment of goodwill or intangible assets would result in a non-cash charge against current earnings, which could lead to a material impact on our results of operations and statements of financial position. Certain liabilities resulting from acquisitions are estimated and could lead to a material impact on our results of operations.
Any impairment of goodwill or intangible assets would result in a non-cash charge against current earnings, which could lead to a material impact on our results of operations and financial condition.
We have authorized 250.0 million shares of common stock, and have approximately 49.8 million shares of common stock outstanding at January 31, 2024. A substantial number of these shares have been issued in connection with acquisitions.
We have authorized 250.0 million shares of common stock, and have approximately 53.3 million shares of common stock outstanding at January 31, 2025. A substantial number of these shares have been issued in connection with acquisitions, including the Transaction.
A widespread outbreak of a communicable disease or a public health crisis could adversely affect the global and domestic economy and our business partners’ ability to conduct business in the United States for an indefinite period of time. For example, in March 2020, the World Health Organization declared a new strain of coronavirus (“COVID-19”) a pandemic.
A widespread outbreak of a communicable disease or a public health crisis could adversely affect the global and domestic economy and our business partners’ ability to conduct business in the United States for an indefinite period of time.
As part of many acquisition transactions, shares are contractually restricted from sale for a one-year period, and as of January 31, 2024, approximately 138 thousand shares of our common stock were under lock-up contractual restrictions that expire by December 31, 2024.
As part of many acquisitions, shares are 22 Table of Contents contractually restricted from sale for a one-year period, and as of January 31, 2025, approximately 3.3 million shares of our common stock were under lock-up contractual restrictions that expire by December 31, 2025.
We are dependent on the services of our executive officers, other key employees, and our staff, the loss of any of whom may have a material adverse effect on our business, financial condition and results of operations.
We are dependent on the services of our executive officers, and other key employees, the loss of any of whom may have a material adverse effect on our business, financial condition and results of operations. Our success depends in large part upon the abilities and continued services of our executive officers, our business unit presidents, and other key employees.
In the past, one of our third-party service providers experienced a data breach that allowed an unauthorized third-party to gain access to the Company’s and its clients’ data, including personally identifiable information.
In the past, our third-party service providers had experienced data breaches that 18 Table of Contents allowed unauthorized third-parties to gain access to the Company’s and its clients’ data, including personally identifiable information.
In the event that the CPA firms with which we maintain ASAs incur judgments and costs related to such suits that threaten the solvency of the CPA firms, we may incur expenditures related to such proceedings. The business services industry is competitive and fragmented.
In the event that the CPA firms with which we maintain ASAs incur judgments and costs related to such suits that threaten the solvency of the CPA firms, we could incur expenditures related to such proceedings, which could have a material adverse effect on our business, financial condition, and results of operations. The business services industry is competitive and fragmented.
SEC staff informed us that independence rules that apply to clients that receive attest services under SEC and Public Company Accounting Oversight Board (“PCAOB”) standards from such CPA firms would prohibit such clients from holding any common stock of CBIZ.
The SEC staff has further informed us that independence rules that apply to clients that receive attest services under SEC and PCAOB standards from such CPA firms would prohibit such clients from holding any shares of our common stock.
Changes in the United States healthcare environment, including new healthcare legislation, may adversely affect the revenue and margins in our healthcare benefit businesses. Our employee benefits business, specifically our group health consulting and brokerage businesses, receives commissions for brokering employer-sponsored healthcare policies with insurance carriers on behalf of the client.
Our employee benefits business, specifically our group health consulting and brokerage businesses, receives commissions for brokering employer-sponsored healthcare policies with insurance carriers on behalf of the client.
The CPA firms are owned by licensed CPAs, a vast majority of whom are employed by us. Under these ASAs, we provide a range of services to the CPA firms, including: administrative functions such as professional staff, office management, bookkeeping, and accounting; preparing marketing and promotion materials; and providing office space, computer equipment, systems support and administrative support.
Under the ASA with CBIZ CPAs and our other ASAs, we provide a range of services to the CPA firms, including: functions such as professional staff, office management, bookkeeping, and accounting; preparing marketing and promotion materials; and providing office space, computer equipment, systems support and administrative support. Services are performed in exchange for a fee.
Significant negative industry or economic trends, disruptions to our business, adverse changes resulting from new governmental regulations, divestitures and sustained market capitalization declines may result in recognition of impairments.
Failure to achieve the anticipated benefits of the Transaction, significant negative industry or economic trends, disruptions to our business, adverse changes resulting from new governmental regulations, negative impact on client list due to loss of customers, impact on client list due to declining revenue of existing customers, divestitures and sustained market capitalization declines may result in recognition of impairments.
Notwithstanding these measures, 10 Table of Contents our customers may face unexpected circumstances that adversely impact their ability to pay their trade receivables or note obligations to us and we may face unexpected losses as a result.
We provide for potential bad debts and recognize additional reserves against bad debts as we deem it appropriate. Notwithstanding these measures, our customers may face unexpected circumstances that adversely impact their ability to pay their trade receivables or note obligations to us, and we may face unexpected losses as a result.
We may not be able to acquire and finance additional businesses which may limit our ability to pursue our business strategy. We acquired five businesses during 2023, and maintain a robust pipeline of potential businesses for acquisition.
We may not be able to acquire and finance additional businesses, which could limit our ability to pursue our business strategy. We acquired five businesses during 2024, including Marcum.
We cannot be sure that future laws and regulations will provide the same or similar opportunities for us to provide business consulting and management services to businesses and individuals, or to meet our operational, financial and strategic objectives.
We cannot be sure that future laws and regulations will provide the similarly favorable opportunities for us to provide business consulting and management services to businesses and individuals, or to meet our operational, financial and strategic objectives. Changes in the United States healthcare environment, including new healthcare legislation, may adversely affect the revenue and margins in our healthcare benefit businesses.
At December 31, 2023, the net carrying value of our goodwill and other intangible assets totaled $865.2 million and $143.4 million, respectively. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, Intangibles - Goodwill and Other, we assess these assets, including client lists, to determine if there is any indication of impairment.
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, Intangibles - Goodwill and Other, and ASC Topic 360, Property, Plant, and Equipment, we assess these assets, including client lists, to determine if there is any indication of impairment.
This factor could cause our quarterly results to be lower than expectations of securities analysts and stockholders, which could result in a decline in the price of our common stock. The future issuance of additional shares could adversely affect the price of our common stock.
As a result, we may not be able to quickly reduce costs in response to any decrease in revenue. This factor could cause our quarterly results to be lower than expectations of securities analysts and stockholders, which could result in a decline in the price of our common stock.
These tax effects are dependent on our stock price and exercise activity, which we do not control, 14 Table of Contents and a decline in our stock price could significantly increase our effective tax rate and adversely affect our financial results. We may be subject to the actions of activist stockholders.
These tax effects are dependent on our stock price and exercise activity, which we do not control, and a decline in our stock price could significantly increase our effective tax rate and adversely affect our results of operations. 20 Table of Contents Rapid technological changes could significantly impact our competitive position, client relationships and operating results and our ability to realize the anticipated benefits of the Transaction.
Accordingly, we do not hold any financial interest in, nor do we enter into any business relationship with, an SEC-reporting attest client that the CPA firm performing an audit could not maintain; further, we do not provide any non-audit services to an SEC-reporting attest client that the CPA firm performing an audit could not sell under the auditor independence limitations set out in the Sarbanes-Oxley Act of 2002 and other professional accountancy independence standards.
Further, we do not provide any non-audit services to an SEC-reporting attest client that the CPA firm performing an audit could not provide under the auditor independence restrictions set out in the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), and other rules and requirements of the SEC and the Public Company Accounting Oversight Board (“PCAOB”).
A substantial majority of our operating expenses, such as personnel and related costs and occupancy costs, are relatively fixed in the short term. As a result, we may not be able to quickly reduce costs in response to any decrease in revenue.
Risk Factors Related to Ownership of Our Common Stock We may be more sensitive to revenue fluctuations than other companies, which could result in fluctuations in the market price of our common stock. A substantial majority of our operating expenses, such as personnel and related costs and occupancy costs, are relatively fixed in the short term.
Our success depends in large part upon the abilities and continued services of our executive officers, our business unit presidents, other key employees, and our staff members. In the course of business operations, employees may retire, resign and seek employment elsewhere, particularly in the current employment environment, given wage pressures and worker shortages.
In the course of business operations, employees may retire, resign or seek employment elsewhere, particularly in the current employment environment, given wage pressures and worker shortages.
To the extent we are unable to find suitable acquisition candidates, an important component of our growth strategy may not be realized. We require a significant amount of cash for interest payments on our debt and to expand our business as planned.
We require a significant amount of cash for interest payments on our debt and to expand our business as planned.
Risk Factors Related to Our Business and Industry Payments on accounts receivable may be slower than expected, or amounts due on receivables or notes may not be fully collectible. Professional services firms often experience higher average accounts receivable days outstanding compared to many other industries, which may be magnified if the general economy worsens.
Professional services firms often experience higher average accounts receivable days outstanding compared to many other industries, which may be magnified if the general economy worsens. If our collections become slower, our liquidity may be adversely impacted. We monitor the aging of receivables 14 Table of Contents regularly and make assessments of the ability of customers to pay amounts due.
Services are performed in exchange for a fee. Fees earned by us under the ASAs are recorded as revenue in the accompanying Consolidated Statements of Comprehensive Income. In the event that accounts receivable and unbilled work in process become uncollectible by the CPA firms, the service fee due to us is typically reduced on a proportional basis.
In the event that accounts receivable and unbilled work in process become uncollectible by the CPA firms, the service fee due to us is typically reduced on a proportional basis. 15 Table of Contents As previously discussed in Item 1, Business, the ASAs do not provide us with control over the associated CPA firms, which are independent entities.
In many cases, these commissions consist of a ratable portion of the insurance premiums on those policies, based upon a sliding scale pertaining to the dollar volume of premiums and/or the number of participants in the plan. 12 Table of Contents Changes in the healthcare environment, including, but not limited to, any legislated changes in the United States’ national healthcare system, that affect the methods by which insurance carriers remunerate brokers, could adversely impact our revenues and margins in this business.
Changes in the healthcare environment, including any legislated changes in the United States’ national healthcare system, that affect the methods by which insurance carriers remunerate brokers, could adversely impact our revenues and margins in this business.
Additionally, rapid changes in artificial intelligence, block chain-based technology, automation and related innovations are increasing the competitiveness landscape. We may not be successful in anticipating or responding to these changes and demand for our services could be further reduced by advanced technologies being deployed by our competitors.
If we are not successful in anticipating or responding to technological changes, we may not generate a return on these investments and demand for our services could be further reduced by advanced technologies being deployed by our competitors. In some cases, we depend on key vendors and partners to provide technology and other support.
Any substantial diversion of management attention or difficulties in operating the combined business could affect our revenues and ability to achieve operational, financial and strategic objectives. We will incur transaction, integration, and restructuring costs in connection with our acquisition program.
Disruption and distraction caused by this process could also prevent us from pursuing, or otherwise divert resources and attention from, otherwise attractive business and growth opportunities. Any substantial diversion of management attention or difficulties in operating the combined business could affect our revenues and ability to achieve operational, financial and strategic objectives.
The ASAs do not provide us with control over the associated CPA firms, which are independent parties. As such, the continuation of the associations with these is subject to the terms and lengths of the various ASAs, and the ability of the parties to work cooperatively together.
As such, the continuation of our association with each CPA firm is subject to the terms and lengths of the applicable ASA, and the ability of the parties to work cooperatively together.
To date, revenues derived from providing services in connection with attestation engagements of the attest firms performed for SEC-reporting clients have not been material. Our goodwill and other intangible assets could become impaired, which could lead to material non-cash charges against earnings and a material impact on our results of operations and statement of financial position.
To date, revenues derived from providing services in connection with attestation engagements of the attest firms performed for SEC-reporting clients have not been material, but we expect they will significantly increase as a result of the Attest Purchase.
With respect to CPA firm clients that are required to file audited financial statements with the SEC, the SEC staff views us and the CPA firms with which we have contractual relationships as a single entity in applying independence rules established by the accountancy regulators and the SEC.
With respect to CPA firm clients that are required to file audited financial statements with the SEC, the SEC staff has informed us that, under Regulation S-X, it considers CBIZ to be an "associated entity" of the CPA firms with which CBIZ has contractual relationships.
These actions adversely impacted the ability of our employees, contractors, suppliers, customers, and other 15 Table of Contents business partners to conduct business activities.
Any mitigation measures implemented by foreign, federal, state, and local governments in response to future public health threats could adversely impact the ability of our employees, contractors, suppliers, customers, and other business partners to conduct business activities.
At December 31, 2023, our debt consisted primarily of $312.4 million in principal amount outstanding under our $600 million unsecured credit facility (the “2022 credit facility” or the “credit facility”).
As of December 31, 2024, our debt consisted primarily of $1.4 billion in principal amount outstanding under our amended and restated credit agreement (the "2024 Credit Facilities") providing for $2.0 billion in senior secured credit facilities, consisting of a $1.4 billion term loan (the "Term Loan") and $600.0 million revolving credit facility (the "Revolving Credit Facility").
Removed
ITEM 1A. RISK FACTORS. The following factors may affect our actual operating and financial results and could cause results to differ materially from those in any forward-looking statements. You should carefully consider the following information.
Added
ITEM 1A. RISK FACTORS. The discussion below describes the material factors, events, and uncertainties that make an investment in our securities risky, and these risk factors should be considered carefully together with all other information in this Annual Report on Form 10-K, including the financial statements and notes thereto.
Removed
If our collections become slower, our liquidity may be adversely impacted. We monitor the aging of receivables regularly and make assessments of the ability of customers to pay amounts due. We provide for potential bad debts and recognize additional reserves against bad debts as we deem it appropriate.
Added
The discussion below does not address all of the risks that we face, and additional risks not presently known to us or that we currently deem immaterial may also arise and impair our business, financial condition and results of operations.
Removed
Our Board of Directors and management team are committed to acting in the best interest of all of our stockholders. We value constructive input from investors and regularly engage in dialogue with our stockholders regarding strategy and performance.
Added
Our business, financial condition or results of operations could be materially adversely affected by the occurrence of any of these risks. Accordingly, you should carefully consider the following information. Risk Factors Related to Our Business and Industry Payments on accounts receivable may be slower than expected, or amounts due on receivables or notes may not be fully collectible.
Removed
Activist stockholders who disagree with the composition of the Board of Directors, our strategy or management approach may seek to effect change through various strategies and channels. Responding to stockholder activism can be costly and time-consuming, disrupt our operations, and divert the attention of management and our employees from our strategic initiatives.
Added
Our business could be adversely affected if Marcum does not perform to our expectations or we underestimate the liabilities we are assuming. Even if we successfully integrate Marcum, there can be no assurance we will realize the anticipated benefits of the Transaction.
Removed
Activist campaigns can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the loss of potential business opportunities, harm our ability to attract new employees, investors, and customers, and cause our stock price to experience periods of volatility or stagnation.
Added
While our management and advisors have spent significant time and resources evaluating Marcum’s business, it is difficult to predict future performance and the benefits from a transaction involving large and complex organizations. In addition, we assumed Marcum’s liabilities other than specified excluded liabilities that were not contributed by Marcum to MAG prior to closing of the Transaction.
Removed
Changes in accounting policies, standards, and interpretations could materially affect how we report our financial condition, results of operations, and cash flows. The FASB, regulatory agencies, and other bodies that establish accounting standards periodically change the financial accounting and reporting standards governing the preparation of our consolidated financial statements.
Added
It is possible that we may have underestimated the liabilities that we assumed, or we may have assumed liabilities that are unknown or that we did not foresee and were not excluded from Marcum’s contribution to Marcum Advisory Group ("MAG").
Removed
Additionally, those bodies that establish and interpret the accounting standards (such as the FASB and the SEC) may change prior interpretations or positions on how these standards should be applied. These changes can be difficult to predict and can materially affect how we record and report our financial condition, results of operations, and cash flows.
Added
If the liabilities that we assumed are more than we anticipate, or insurance coverage is not available to us in sufficient amounts to cover the liabilities that we assumed, it could increase the effective cost of the Transaction and adversely impact our financial condition and results of operations.
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In unusual circumstances, we could be required to retroactively apply a new or revised standard, resulting in changes to previously reported financial results. Rapid technological changes could significantly impact our competitive position, client relationships and operating results.
Added
The performance and benefits that we ultimately achieve may be influenced by a variety of factors, many of which are outside of our control. If we do not achieve the anticipated benefits of the Transaction, at all or in the expected timeframe, or become responsible for costs or liabilities that we did not foresee, our business could be adversely affected.
Removed
The effort to gain technological expertise and develop new technologies in our business may require us to incur significant expenses. In some cases, we depend on key vendors and partners to provide technology and other support.
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The CPA firms are wholly owned by licensed CPAs, a vast majority of whom are employed by us. As a condition to close the Transaction, CBIZ CPAs, a CPA firm with which we maintain an ASA, completed the Attest Purchase, which consisted of purchasing from Marcum substantially all of Marcum's attest business assets, subject to certain exclusions.
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The global spread of COVID-19 negatively impacted the global economy and disrupted both financial markets and international trade. The COVID-19 pandemic resulted in increased unemployment levels and significantly impacted global supply chain. In addition, federal, state, and local governments implemented various mitigation measures, including travel restrictions, restrictions on public gatherings, shelter-in-place restrictions, and limitations on business activities.
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We expect the Attest Purchase will significantly increase the attest services received and the revenues generated under our existing ASA with CBIZ CPAs.
Removed
If the lenders accelerate the repayment of borrowings, we may not have sufficient assets to repay our debt. Risk Factors Related to Ownership of Our Common Stock We may be more sensitive to revenue fluctuations than other companies, which could result in fluctuations in the market price of our common stock.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCBIZ engages with these partners to 17 Table of Contents monitor and maintain the performance and effectiveness of third-party products and services that are deployed in CBIZ’s environment, to scan for potential vulnerabilities and to conduct penetration testing. CBIZ’s IT Security Director reports to CBIZ’s Chief Information Officer and is the head of the Company’s cybersecurity team.
Biggest changeCyber partners are a key part of CBIZ’s cybersecurity infrastructure. CBIZ partners with leading cybersecurity companies and organizations, leveraging third-party technology and expertise. CBIZ engages with these partners to monitor and maintain the performance and effectiveness of third-party products and services that are deployed in CBIZ’s environment, to scan for potential vulnerabilities and to conduct penetration testing.
See “Risk Factors – Risk Factors Related to Our Business and Industry – Cyber-attacks or other security breaches involving our computer systems or the systems of one or more of our vendors could materially and adversely affect our business.”
See “Risk Factors – Risk Factors Related to Our Business and Industry – Cyberattacks or other security breaches involving our computer systems or the systems of one or more of our vendors could materially and adversely affect our business.”
CBIZ faces risks from cybersecurity threats that could have a material adverse effect on its business, financial condition, results of operations or cash flows. CBIZ has experienced, and will continue to experience, cyber incidents in the normal course of its business.
CBIZ has experienced, and will continue to experience, cyber incidents in the normal course of its business. However, prior cybersecurity incidents have not had a material adverse effect on CBIZ’s business, financial condition, results of operations or cash flows.
The IT Security Director is responsible for assessing and managing CBIZ’s cyber risk management program, informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. The cybersecurity team has decades of experience selecting, deploying and operating cybersecurity technologies, initiatives and processes.
CBIZ’s Vice President, IT Security and Compliance reports to CBIZ’s Chief Information Officer and is the head of the Company’s cybersecurity team. The IT Security Director is responsible for assessing and managing CBIZ’s cyber risk management program, informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts.
Additionally, members of the cyber security team have extensive information technology and program management expertise and have earned various cybersecurity certifications. Finally, the cybersecurity team relies on threat intelligence as well as other information obtained from governmental, public or private sources, including external consultants engaged by CBIZ.
Finally, the cybersecurity team relies on threat intelligence as well as other information obtained from governmental, public or private sources, including external consultants engaged by CBIZ. The Board of Directors oversees CBIZ’s cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks.
The Board of Directors oversees CBIZ’s cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks. The cybersecurity team briefs the Board of Directors on the status of CBIZ’s cyber risk management program, typically on a semi-annual basis.
The cybersecurity team briefs the Board of Directors on the status of CBIZ’s cyber risk management program, typically on a semi-annual basis. CBIZ faces risks from cybersecurity threats that could have a material adverse effect on its business, financial condition, results of operations or cash flows.
Removed
Cyber partners are a key part of CBIZ’s cybersecurity infrastructure. CBIZ partners with leading cybersecurity companies and organizations, leveraging third-party technology and expertise.
Added
The cybersecurity team has decades of experience selecting, deploying and operating cybersecurity technologies, initiatives and processes. Additionally, members of the cyber security team have extensive information technology and program management expertise 23 Table of Contents and have earned various cybersecurity certifications.
Removed
However, prior cybersecurity incidents have not had a material adverse effect on CBIZ’s business, financial condition, results of operations or cash flows.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. Our corporate headquarters are located at 5959 Rockside Woods Blvd. N., Suite 600, Independence, Ohio 44131, in leased premises. We lease more than 120 offices in 33 states and the District of Columbia and believe that our current facilities are sufficient for our current needs.
Biggest changeITEM 2. PROPERTIES. Our corporate headquarters are located at 5959 Rockside Woods Blvd. N., Suite 600, Independence, Ohio 44131, in leased premises. We lease more than 160 offices in 35 states and the District of Columbia and believe that our current facilities are sufficient for our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of the date hereof, we are not engaged in any legal proceedings that are reasonably expected, individually or in the aggregate, to have a material adverse effect on our business, financial condition, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 18 Table of Contents PART II
Biggest changeAs of the date hereof, we are not engaged in any legal proceedings that are reasonably expected, individually or in the aggregate, to have a material adverse effect on our business, financial condition, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 24 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities Fourth Quarter Purchases Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Number of Shares That May Yet Be Purchased Under the Plan October 1 – October 31, 2023 107 $ 52.56 107 4,166 November 1 – November 30, 2023 28 $ 54.62 28 4,138 December 1 – December 31, 2023 — $ — — 4,138 135 $ 52.99 135 Refer to Note 13, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program.
Biggest changeIssuer Purchases of Equity Securities Fourth Quarter Purchases Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Number of Shares That May Yet Be Purchased Under the Plan October 1 – October 31, 2024 — $ — — 4,997 November 1 – November 30, 2024 — $ — — 4,997 December 1 – December 31, 2024 1 $ 77.90 1 4,996 1 $ 77.90 1 Refer to Note 14, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program.
Issuer Purchases of Equity Securities - Shares repurchased during the three months ended December 31, 2023 (reported on a trade-date basis) are summarized in the table below (in thousands, except per share data). Average price paid per share includes fees and commissions.
Issuer Purchases of Equity Securities - Shares repurchased during the three months ended December 31, 2024 (reported on a trade-date basis) are summarized in the table below (in thousands, except per share data). Average price paid per share includes fees and commissions.
Fiscal year ending December 31. Copyright© 2024 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2024 Russell Investment Group.
Fiscal year ending December 31. Copyright© 2025 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2025 Russell Investment Group.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information for Common Stock - Our common stock is traded on the NYSE under the trading symbol “CBZ.” Holders of Record - The number of holders of our common stock based on record ownership as of December 31, 2023 was approximately 2,381.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information for Common Stock - Our common stock is traded on the NYSE under the trading symbol “CBZ.” Holders of Record - The number of holders of our common stock based on record ownership as of December 31, 2024 was approximately 2,430.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2018 and tracks it through December 31, 2023. 19 Table of Contents COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN * Among CBIZ, Inc., the S&P 500 Index, the Russell 2000 Index, and a Peer Group *$100 invested on December 31, 2018 in stock or index, including reinvestment of dividends.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, 2019 and tracks it through December 31, 2024. 25 Table of Contents COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN * Among CBIZ, Inc., the S&P 500 Index, the Russell 2000 Index, and a Peer Group *$100 invested on December 31, 2019 in stock or index, including reinvestment of dividends.
Recent Sales of Unregistered Securities - During the year ended December 31, 2023, we issued approximately 242 thousand shares of our common stock as payment for current year acquisitions, as well as payment for contingent consideration for current year and previous acquisitions.
Recent Sales of Unregistered Securities - During the year ended December 31, 2024, we issued approximately 159 thousand shares of our common stock as payment for current year acquisitions, as well as payment for contingent consideration for current year and previous acquisitions.
Dividends - Historically, we have not paid cash dividends on our common stock. Refer to Note 9, Debt and Financing Arrangements, to the accompanying consolidated financial statements for information relating to restrictions on declaring or making dividend payments under our 2022 credit facility.
Dividends - Historically, we have not paid cash dividends on our common stock. Refer to Note 10, Debt and Financing Arrangements, to the accompanying consolidated financial statements for information relating to restrictions on declaring or making dividend payments under our 2024 Credit Facilities.
Removed
All rights reserved. 2018 2019 2020 2021 2022 2023 CBIZ, Inc. $ 100.00 $ 136.85 $ 135.08 $ 198.58 $ 237.82 $ 317.72 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 Peer Group 100.00 132.37 144.22 198.44 186.37 204.32 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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All rights reserved. 2019 2020 2021 2022 2023 2024 CBIZ, Inc. $ 100.00 $ 98.70 $ 145.10 $ 173.78 $ 232.16 $ 303.52 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93 Peer Group 100.00 108.95 149.91 140.80 154.36 197.37 The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRefer to Note 9, Debt and Financing 28 Table of Contents Arrangements, and Note 13, Common Stock, to the accompanying consolidated financial statements for further discussion on our 2022 credit facility and Share Repurchase Program. 2023 - Net cash used in financing activities in 2023 consisted of $73.8 million of share repurchases, $45.2 million of contingent consideration payments for prior acquisitions, and a net decrease of $13.6 million in client fund obligations, partially offset by $8.8 million in proceeds from the exercise of stock options and $46.7 million net proceeds from borrowings under our 2022 credit facility. 2022 - Net cash used in financing activities in 2022 consisted of $129.8 million of share repurchases, $21.2 million of contingent consideration payments for prior acquisitions and $2.1 million paid as deferred financing costs related to the 2022 credit facility, partially offset by a net increase of $15.4 million in client fund obligations, $10.0 million in proceeds from the exercise of stock options and $110.4 million net proceeds from borrowings under our 2022 credit facility.
Biggest changeRefer to Note 10, Debt and Financing Arrangements, and Note 14, Common Stock, to the accompanying consolidated financial statements for further discussion on our 2024 Credit Facilities and Share Repurchase Program. 34 Table of Contents 2024 - Net cash provided by financing activities in 2024 consisted of $1,108.5 million net proceeds from our 2024 Credit Facilities and a net increase of $16.0 million in client fund obligations, offset by $11.5 million used to repurchase share for tax withholding purposes, $56.8 million of contingent consideration payments for prior acquisitions, and $20.7 million deferred financing fees paid in connection with the 2024 Credit Facilities 2023 - Net cash used in financing activities in 2023 consisted of $73.8 million of share repurchases, $45.2 million of contingent consideration payments for prior acquisitions, and a net decrease of $13.6 million in client fund obligations, partially offset by $8.8 million in proceeds from the exercise of stock options and $46.7 million net proceeds and borrowings under our prior credit facility.
Actual results could differ from our estimates and assumptions, and any such difference could be material to our consolidated financial statements. Significant accounting policies, including Revenue Recognition, are described more fully in Note 1, Basis of Presentation and Significant Accounting Policies, to the accompanying consolidated financial statements.
Actual results could differ from our estimates and assumptions, and any such difference could be material to our consolidated financial statements. Significant accounting policies, including Revenue Recognition, are described fully in Note 1, Basis of Presentation and Significant Accounting Policies, to the accompanying consolidated financial statements.
At any specific point in time, working capital is subject to many variables, including seasonality and the timing of cash receipts and payments, most notably in the timing of insurance premiums to the carriers within our Benefits and Insurance practice group.
At any specific point in time, working capital is subject to many variables, including seasonality and the timing of cash receipts and payments, most notably in the timing of insurance premiums to the carriers within our Benefits and Insurance Services practice group.
Intangible assets with definite lives, such as client lists and non-compete agreements, are amortized using the straight-line method over their estimated useful lives (generally ranging from two to fifteen years). We review these assets for impairment whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable.
Intangible assets with definite lives, such as client lists and non-compete agreements, are amortized using the straight-line method over their estimated useful lives (generally ranging from three to fifteen years). We review these assets for impairment whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable.
In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management’s expectations. Please see the sections of this report entitled “Forward-Looking Statements” and “Risk Factors.” This section generally discusses the results of operations for fiscal year 2023 compared to fiscal year 2022.
In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management’s expectations. Please see the sections of this report entitled “Forward-Looking Statements” and “Risk Factors.” This section generally discusses the results of operations for fiscal year 2024 compared to fiscal year 2023.
Refer to Note 13, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program. RESULTS OF OPERATIONS We provide professional business services that help clients manage their finances and employees. We deliver our integrated services through the following three practice groups: Financial Services, Benefits and Insurance Services and National Practices.
Refer to Note 14, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program. RESULTS OF OPERATIONS We provide professional business services that help clients manage their finances and employees. We deliver our integrated services through the following three practice groups: Financial Services, Benefits and Insurance Services and National Practices.
Other income of $21.0 million in 2023 included a $19.5 million net gain related to the deferred compensation plan, $2.8 million gain related to the sale of certain assets, $0.7 million interest income from non-operating investments, as well as $0.7 miscellaneous income, offset by $2.7 million expense due to the net increase to the fair value of the contingent purchase price liability.
Other income of $21.0 million in 2023 consisted of a net gain of $19.5 million related to the deferred compensation plan, $2.8 million gain related to the sale of certain assets, $0.7 million interest income from non-operating investments, as well as $0.7 million miscellaneous income, offset by $2.7 million expense due to the net increase to the fair value of the contingent purchase price liability.
For further information regarding our goodwill balances, refer to Note 5, Goodwill and Other Intangible Assets, net, to the accompanying consolidated financial statements. Loss Contingencies - Loss contingencies, including litigation claims, are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable.
For further information regarding our goodwill balances, refer to Note 6, Goodwill and Other Intangible Assets, Net, to the accompanying consolidated financial statements. Loss Contingencies - Loss contingencies, including litigation claims, are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable.
Debt Covenant Compliance - We are required to meet certain financial covenants with respect to (i) total leverage ratio and (ii) interest coverage ratio. We were in compliance with our covenants as of December 31, 2023. Our ability to service our debt and to fund future strategic initiatives will depend upon our ability to generate cash in the future.
Debt Covenant Compliance - We are required to meet certain financial covenants with respect to (i) total leverage ratio and (ii) interest coverage ratio. We were in compliance with our covenants as of December 31, 2024. Our ability to service our debt and to fund future strategic initiatives will depend upon our ability to generate cash in the future.
Contingent liabilities are often resolved over long time periods. Estimating probable losses requires analysis that often depends on judgment about potential actions by third parties. Refer to Note 11, Commitments and Contingencies, to the accompanying consolidated financial statements for further information.
Contingent liabilities are often resolved over long time periods. Estimating probable losses requires analysis that often depends on judgment about potential actions by third parties. Refer to Note 12, Commitments and Contingencies, to the accompanying consolidated financial statements for further information.
For example, for a business acquired on July 1, 2022, revenue for the period January 1, 2023 through June 30, 2023 would be reported as revenue from acquired businesses whereas revenue for the periods from July 1 through December 31 of both years would be reported as same-unit revenue.
For example, for a business acquired on July 1, 2023, revenue for the period January 1, 2024 through June 30, 2024 would be reported as revenue from acquired businesses whereas revenue for the periods from July 1 through December 31 of both years would be reported as same-unit revenue.
Cash Provided by Operating Activities 2023 compared to 2022 - Cash provided by operating activities was $153.5 million during 2023, consisting of net income of $121.0 million and certain non-cash items, such as depreciation and amortization expense of $36.3 million, share-based compensation expense of $12.3 million, deferred income tax of $11.3 million, bad debt expense of $1.6 million, and adjustment to the fair value of contingent purchase consideration of $2.7 million, offset by $29.0 million use of cash from working capital management.
Cash provided by operating activities was $153.5 million during 2023, consisting of net income of $121.0 million and certain non-cash items, such as depreciation and amortization expense of $36.3 million, share-based compensation expense of $12.3 million, deferred income tax of $11.3 million, bad debt expense of $1.6 million, adjustment to the fair value of contingent purchase consideration of $2.7 million, offset by $29.0 million of cash generated from working capital management.
Cash flows from operations and available capital resources allow us to make strategic acquisitions, repurchase shares of our common stock when accretive to stockholders, meet working capital needs, and service our debt. Generally, we maintain low levels of cash and apply any available cash to pay down our outstanding debt balance.
Cash 33 Table of Contents flows from operations and available capital resources allow us to make strategic acquisitions, repurchase shares of our common stock when accretive to stockholders, meet working capital needs, and service our debt. Generally, we maintain low levels of cash and apply any available cash to pay down our outstanding debt balance.
The cost-plus contract is a five-year contract with the most recent renewal through 26 Table of Contents December 31, 2028. Revenues from this single client accounted for approximately 75% of the National Practice group’s revenue. Operating expenses have increased mainly due to increases in salaries and benefits costs.
The cost-plus contract is a five-year contract with the most recent renewal through 32 Table of Contents December 31, 2028. Revenues from this single client accounted for approximately 75% of the National Practice group’s revenue. Operating expenses have increased mainly due to increases in salary and benefits costs.
Letters of credit totaled $3.5 million and $5.0 million at December 31, 2023 and 2022, respectively. In addition, we provide license bonds to various state agencies to meet certain licensing requirements. The amount of license bonds outstanding was $2.3 million at December 31, 2023 and 2022.
Letters of credit totaled $3.2 million and $3.5 million at December 31, 2024 and 2023, respectively. In addition, we provide license bonds to various state agencies to meet certain licensing requirements. The amount of license bonds outstanding was $2.2 million and $2.3 million at December 31, 2024 and 2023, respectively.
For discussion related to the results of operations and changes in financial conditions for fiscal year 2022 compared to fiscal year 2021 refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on February 24, 2023.
For discussion related to the results of operations and changes in financial conditions for fiscal year 2023 compared to fiscal year 2022 refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 23, 2024.
We believe that repurchasing shares of our common stock is a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders.
In addition, we believe that repurchasing shares of our common stock can be a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders.
The interest income on these investments mitigates the interest rate risk for the borrowing costs of the 2022 credit facility, as the rates on both the investments and the outstanding borrowings against the credit facility are based on market conditions.
The interest income on these investments mitigates the interest rate risk for the borrowing costs of the 2024 Credit Facilities, as the rates on both the investments and the outstanding borrowings against the credit facility are based on market conditions.
The majority of our operating expenses relate to personnel costs, which includes (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation and (iv) share-based compensation. Excluding the impact of non-qualified deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $144.9 million in 2023 as compared to 2022.
The majority of our operating expenses relate to personnel costs, which includes (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation and (iv) share-based compensation. Excluding the impact of non-qualified deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $261.4 million in 2024 as compared to 2023.
Refer to Note 6, Financial Instruments, and Note 9, Debt and Financing Arrangements, to the accompanying consolidated financial statements for further discussion regarding investments and our debt and financing arrangements. 30 Table of Contents CRITICAL ACCOUNTING ESTIMATES The preparation of our consolidated financial statements in accordance with GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions that in certain circumstances affect amounts reported in the accompanying consolidated financial statements.
Refer to Note 7, Financial Instruments, and Note 10, Debt and Financing Arrangements, to the accompanying consolidated financial statements for further discussion regarding investments and our debt and financing arrangements. 36 Table of Contents CRITICAL ACCOUNTING ESTIMATES The preparation of our consolidated financial statements in accordance with GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions that in certain circumstances affect amounts reported in the accompanying consolidated financial statements.
Days sales outstanding (“DSO”) represent accounts receivable and unbilled revenue (net of realization adjustments) at the end of the period, divided by trailing twelve months' daily revenue. DSO was 78 days as of December 31, 2023 and 74 days as of December 31, 2022.
Days sales outstanding (“DSO”) represent accounts receivable and unbilled revenue (net of realization adjustments) at the end of the period, divided by trailing twelve months' daily revenue. DSO was 73 days as of December 31, 2024 and 78 days as of December 31, 2023.
On February 7, 2024, the CBIZ Board of Directors authorized the purchase of up to 5.0 million shares of our common stock under our Share Repurchase Program (the “Share Repurchase Program”), which may be suspended or discontinued at 21 any time and expires on March 31, 2025.
On February 11, 2025, the CBIZ Board of Directors authorized the purchase of up to 5.0 million shares of our common stock under our Share Repurchase Program (the “Share Repurchase Program”), which may be suspended or discontinued at any time and expires on March 31, 2026.
After considering changes to assumptions used in our most recent quantitative testing for each reporting unit, including the capital market environment, economic and market conditions, industry competition and trends, our weighted average cost of capital, changes in management and key personnel, the price of our common stock, changes in our results of operations, the magnitude of the excess of fair value over the carrying amount of each reporting unit as determined in our most recent quantitative testing, and other factors, we concluded that it was 31 Table of Contents more likely than not that the fair values of each of our reporting units were more than their respective carrying values and, therefore, did not perform a quantitative impairment analysis.
Any such impairment charge would reduce earnings and could be material. 37 Table of Contents After considering changes to assumptions used in our most recent quantitative testing for each reporting unit, including the capital market environment, economic and market conditions, industry competition and trends, our weighted average cost of capital, changes in management and key personnel, the price of our common stock, changes in our results of operations, the magnitude of the excess of fair value over the carrying amount of each reporting unit as determined in our most recent quantitative testing, and other factors, we concluded that it was more likely than not that the fair values of each of our reporting units were more than their respective carrying values and, therefore, did not perform a quantitative impairment analysis.
Investing Activities The majority of our investing activities relate to acquisitions, capital expenditures and net activity related to funds held for clients.
Cash Used in Investing Activities The majority of our investing activities relate to acquisitions, capital expenditures and net activity related to funds held for clients.
The non-qualified deferred compensation plan increased G&A expenses by $2.3 million in 2023, and decreased G&A expenses by $2.4 million in 2022.
The non-qualified deferred compensation plan increased G&A expenses by $2.4 million in 2024 and by $2.3 million in 2023.
In addition, other miscellaneous discretionary costs increased by approximately $0.6 million, primarily driven by higher recruiting and other employee costs to support business growth. Operating expense as a percentage of revenue remained relatively unchanged at 81.2% in 2023 and 81.1% in 2022.
In addition, other miscellaneous discretionary costs increased by approximately $0.1 million, primarily driven by higher employee costs to support business growth. Operating expense as a percentage of revenue remained relatively unchanged at 81.9% in 2024 as compared 81.2% in 2023.
Excluding the impact of the non-qualified deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $1,350.8 million, or 84.9% of revenue, in 2023 as compared to $1,205.9 million, or 85.4% of revenue, in 2022.
Excluding the impact of the non-qualified deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $1,612.2 million, or 88.9% of revenue, in 2024 as compared to $1,350.8 million, or 84.9% of revenue, in 2023.
The weighted average interest rate under the credit facility was 5.23% in 2023 and 2.67% in 2022. The credit facility allows for the allocation of funds for future strategic initiatives, including acquisitions and the repurchase of our common stock, subject to the terms and conditions of the credit facility.
The blended weighted average interest rate under the credit facility was 6.00% in 2024 and 5.23% in 2023. The credit facility allows for the allocation of funds for future strategic initiatives, including acquisitions and the repurchase of our common stock, subject to the terms and conditions of the credit facility.
Total other expense, net includes a net gain of $19.5 million and a net loss of $19.6 million associated with the non-qualified deferred compensation plan in 2023 and 2022, respectively.
Total other expense, net includes a net gain of $21.1 million and a net gain of $19.5 million associated with the non-qualified deferred compensation plan in 2024 and 2023, respectively.
Excluding the impact of the deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, G&A expenses would have been $55.7 million, or 3.5% of revenue, in 2023 as compared to $57.4 million, or 4.1% of revenue, in 2022, a decrease of $1.7 million in 2023 as compared to prior year.
Excluding the impact of the deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, G&A expenses would have been $106.4 million, or 5.9% of revenue, in 2024 as compared to $55.7 million, or 3.5% of revenue, in 2023, an increase of $50.7 million in 2024 as compared to prior year.
Personnel costs and other operating expenses are discussed in further detail under “Operating Practice Groups.” 23 Table of Contents Corporate General & Administrative Expenses The following table presents our Corporate General & Administrative (“G&A”) expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (Amounts in thousands, except percentages) G&A expenses $ 57,965 $ 55,023 G&A expenses % of revenue 3.6 % 3.9 % G&A expenses excluding deferred compensation $ 55,669 $ 57,416 G&A expenses excluding deferred compensation % of revenue 3.5 % 4.1 % Our G&A expenses increased by approximately $2.9 million, or 5.3%, in 2023 as compared to 2022, and decreased to 3.6% of revenue from 3.9% of revenue for the prior year.
Personnel costs and other operating expenses are discussed in further detail under “Operating Practice Groups.” 29 Table of Contents Corporate General & Administrative Expenses The following table presents our Corporate General & Administrative (“G&A”) expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (Amounts in thousands, except percentages) G&A expenses $ 108,753 $ 57,965 G&A expenses % of revenue 6.0 % 3.6 % G&A expenses excluding deferred compensation $ 106,386 $ 55,669 G&A expenses excluding deferred compensation % of revenue 5.9 % 3.5 % Our G&A expenses increased by approximately $50.8 million, or 87.6%, in 2024 as compared to 2023, and increased to 6.0% of revenue from 3.6% of revenue for the prior year.
At December 31, 2023, we had $312.4 million outstanding under the credit facility, as well as letters of credit and license bonds totaling $5.8 million. Available funds under the credit facility, based on the terms of the commitment, were approximately $272.0 million at December 31, 2023.
At December 31, 2024, we had $1,420.9 million outstanding under the credit facility, as well as letters of credit and license bonds totaling $5.4 million. Available funds under the credit facility, based on the terms of the commitment, were approximately $556.0 million at December 31, 2024.
CAPITAL RESOURCES The following table presents our capital structure (in thousands): December 31, 2023 2022 Bank debt $ 312,400 $ 265,700 Stockholders' equity 791,618 713,452 Total capital $ 1,104,018 $ 979,152 Credit Facility - Our primary financing arrangement is the $600.0 million unsecured credit facility, by and among CBIZ Operations, Inc., CBIZ, Inc. and Bank of America, N.A., as administrative agent and bank, and other participating banks, which provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases, and matures in 2027.
CAPITAL RESOURCES The following table presents our capital structure (in thousands): December 31, 2024 2023 Bank debt $ 1,420,900 $ 312,400 Stockholders' equity 1,779,983 791,618 Total capital $ 3,200,883 $ 1,104,018 Credit Facility - Our primary financing arrangement is the $2.0 billion unsecured credit facility, by and among CBIZ Operations, Inc., CBIZ, Inc. and Bank of America, N.A., as administrative agent and bank, and other participating banks, which provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases, and matures in 2029.
Other Income (Expense), net The following table presents the components of Other income (expense), net for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (Amounts in thousands) Interest expense $ (20,131) $ (8,039) Gain on sale of operations, net 176 413 Other income (expense), net (1) 21,019 (19,243) Total other income (expense), net $ 1,064 $ (26,869) (1) Other income (expense), net includes a net gain of $19.5 million in 2023 and a net loss of $19.6 million in 2022, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes.
Other Income (Expense), net The following table presents the components of Other income (expense), net for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (Amounts in thousands) Interest expense $ (34,379) $ (20,131) Gain on sale of operations, net 4,932 176 Other income, net (1) 13,538 21,019 Total other income (expense), net $ (15,909) $ 1,064 (1) Other income, net includes a net gain of $21.1 million in 2024 and a net gain of $19.5 million in 2023, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes.
Pursuant to previously authorized share repurchase programs, we repurchased 1.3 million shares of our common stock in the open market at a total cost of approximately $65.1 million in 2023 and 2.8 million shares at a total cost of approximately $122.8 million in 2022.
Pursuant to previously authorized share repurchase programs, we repurchased 1.3 million shares of our common stock in the open market at a total cost of approximately $65.1 million in 2023. We did not repurchase any shares of our common stock in the open market in 2024.
The shares may be purchased (i) in the open market, (ii) in privately negotiated transactions, or (iii) under Rule 10b5-1 trading plans, which may include purchases from our employees, officers and directors, in accordance with SEC rules. CBIZ management will determine the timing and amount of the transaction based on its evaluation of market conditions and other factors.
The shares may be purchased (i) in the open market, (ii) in privately negotiated transactions, or (iii) under Rule 10b5-1 trading plans. CBIZ management will determine the timing and amount of the transaction based on its evaluation of market conditions and other factors.
If under the quantitative assessment the fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, must be measured. Any such impairment charge would reduce earnings and could be material.
If under the quantitative assessment the fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, must be measured.
Our average debt balance and weighted average interest rate was $364.1 million and 5.23%, respectively, in 2023, as compared to $267.0 million and 2.67%, respectively, in 2022. The increase in interest expense in 2023 as compared to 2022 was driven by a higher average debt balance as well as higher weighted average effective interest rate.
Our blended average debt balance and blended weighted average interest rate was $538.6 million and 6.00%, respectively, in 2024, as compared to $364.1 million and 5.23%, respectively, in 2023. The increase in interest expense in 2024 as compared to 2023 was driven by a higher average debt balance as well as higher weighted average effective interest rate.
We repurchased 1.3 million shares of our common stock in the open market at a total cost of approximately $65.1 million in 2023 and 2.8 million shares at a total cost of approximately $122.8 million in 2022. Refer to Note 13, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program.
Refer to Note 2, Business Combinations, to the accompanying consolidated financial statements for further discussion on acquisitions. We repurchased no shares of our common stock in the open market in 2024 and 1.3 million shares at a total cost of approximately $65.1 million in 2023.
Revenue The following table summarizes total revenue for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 Percent 2022 Percent (Amounts in thousands, except percentages) Financial Services $ 1,160,686 72.9 % $ 1,010,068 71.5 % Benefits and Insurance Services 382,605 24.1 % 358,007 25.4 % National Practices 47,903 3.0 % 43,904 3.1 % Total CBIZ revenue $ 1,591,194 100.0 % $ 1,411,979 100.0 % A detailed discussion of same-unit revenue by practice group is included under “Operating Practice Groups.” Non-qualified Deferred Compensation Plan - We sponsor a non-qualified deferred compensation plan ("NQDCP"), under which a CBIZ employee’s compensation deferral is held in a rabbi trust and invested accordingly as directed by the employee.
Revenue The following table summarizes total revenue for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 % 2023 % (Amounts in thousands, except percentages) Financial Services $ 1,362,539 75.1 % $ 1,160,686 72.9 % Benefits and Insurance Services 401,048 22.1 % 382,605 24.1 % National Practices 49,885 2.8 % 47,903 3.0 % Total CBIZ revenue $ 1,813,472 100.0 % $ 1,591,194 100.0 % A detailed discussion of same-unit revenue by practice group is included under “Operating Practice Groups.” Non-qualified Deferred Compensation Plan - We sponsor a non-qualified deferred compensation plan ("NQDCP"), under which a CBIZ employee’s compensation deferral is held in a rabbi trust and invested accordingly as directed by the employee.
Refer to Note 1, Basis of Presentation and Significant Accounting Policies, and Note 18, Business Combinations, to the accompanying consolidated financial statements for further discussion on our acquisitions and a further description of funds held for clients and client fund obligations. 2023 - Net cash used in investing activities in 2023 consisted primarily of $53.1 million cash paid for business acquisitions, $23.1 million in capital expenditures, and $10.3 million payments of working capital adjustments related to previously completed acquisitions, partially offset by $4.3 million net proceeds received from the sale of client funds investments, and $3.0 million proceeds received from the sale of certain assets. 2022 - Net cash used in investing activities in 2022 consisted of $79.1 million related to business acquisitions, $8.6 million in capital expenditures, $7.4 million net purchase of client funds, and $7.0 million payments of working capital adjustments related to previously completed acquisitions, offset by $3.0 million proceeds received from the sale of a book of business in the Benefit and Insurance practice group.
Refer to Note 1, Basis of Presentation and Significant Accounting Policies, and Note 2, Business Combinations, to the accompanying consolidated financial statements for further discussion on our acquisitions and a further description of funds held for clients and client fund obligations. 2024 - Net cash used in investing activities in 2024 consisted primarily of $1,087.5 million cash paid for the Transaction and other 2024 business acquisitions, $12.9 million in capital expenditures, $1.3 million net purchases of client fund investments, and $34.7 million payments primarily related to the a $22.1 million notes to CBIZ CPAs, and other working capital adjustments related payments, partially offset by $7.1 million proceeds received from the sale of certain assets. 2023 - Net cash used in investing activities in 2023 consisted of $53.1 million related to business acquisitions, $23.1 million in capital expenditures, and $10.3 million payments of working capital adjustments related to previously completed acquisitions, partially offset by $4.3 million proceeds received from the sale of client funds investment and $3.0 million proceeds received from sale of certain assets.
Same-unit revenue grew by $76.8 million, or 7.6%, across all service lines, primarily driven by a $52.6 million increase from those units that provide traditional accounting and tax-related services, a $16.1 million increase from those units that provide project-oriented advisory services, and an $8.1 million increase in government healthcare compliance business.
Same-unit revenue grew by $55.7 million, or 4.8%, across all service lines, primarily driven by a $24.5 million increase from those units that provide traditional accounting and tax-related services, a $19.2 million increase in government healthcare compliance business, and a $11.9 million increase from those units that provide project-oriented advisory services.
LIQUIDITY AND CAPITAL RESOURCES The following table is derived from our Consolidated Statements of Cash Flows (in thousands): Year Ended December 31, 2023 2022 Net cash provided by operating activities $ 153,507 $ 126,132 Net cash used in investing activities (79,393) (99,118) Net cash used in financing activities (77,111) (17,343) 27 Table of Contents We generate strong cash flows from operations and have access to a $600.0 million credit facility, which enables us to fund investments and operating projects that are designed to optimize stockholder return.
LIQUIDITY AND CAPITAL RESOURCES The following table is derived from our Consolidated Statements of Cash Flows (in thousands): Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 123,692 $ 153,507 Net cash used in investing activities (1,129,283) (79,393) Net cash provided by (used in) financing activities 1,035,613 (77,111) We generate strong cash flows from operations and have access to $556.0 million under the 2024 Credit Facility, which enables us to fund investment and operating projects that are designed to optimize stockholder return.
Operating expense as a percentage of revenue increased to 86.0% of revenue in 2023 as compared to 84.2% of revenue for the prior year. The non-qualified deferred compensation plan increased operating expenses by $17.2 million in 2023, but decreased operating expense by $17.3 million in 2022.
Operating expense as a percentage of revenue increased to 89.9% of revenue in 2024 as compared to 86.0% of revenue for the prior year. The non-qualified deferred compensation plan increased operating expenses by $18.8 million in 2024 and by $17.2 million in 2023.
Excluding the impact of the non-qualified deferred compensation plan, total other expense, net would have been $22.7 million in 2023 and $10.3 million in 2022, a net increase in expense of approximately $12.4 million.
Excluding the impact of the non-qualified deferred compensation plan, total other expense, net would have been $42.8 million in 2024 and $22.7 million in 2023, a net increase in expense of approximately $20.1 million.
EXECUTIVE SUMMARY Financial Year in Review - Revenue of $1,591.2 million in 2023 grew $179.2 million, or 12.7%, from revenue of $1,412.0 million in 2022. Same-unit revenue, as defined below in the "Results of Operations" section, increased by $104.0 million, or 7.4%, while acquisitions, net of divestitures, contributed $75.2 million to revenue, or 5.3%.
EXECUTIVE SUMMARY Financial Year in Review - Revenue of $1,813.5 million in 2024 grew $222.3 million, or 14.0%, from revenue of $1,591.2 million in 2023. Same-unit revenue, as defined below in the "Results of Operations" section, increased by $76.9 million, or 4.8%, while acquisitions, net of divestitures, contributed $145.4 million to revenue, or 8.0%.
Identifiable intangible assets other than goodwill include client lists and non-compete agreements, which require significant judgments in determining the fair value. We carry client lists and non-compete agreements at cost, less accumulated amortization, in the accompanying Consolidated Balance Sheets. Goodwill is not amortized, but rather is tested for impairment annually during the fourth quarter.
We carry client lists and non-compete agreements at cost, less accumulated amortization, in the accompanying Consolidated Balance Sheets. Goodwill is not amortized, but rather is tested for impairment annually during the fourth quarter.
Income Tax Expense The following table presents our income tax expense for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (Amounts in thousands, except percentages) Income tax expense $ 45,335 $ 36,121 Effective tax rate 27.3 % 25.5 % The increase in income tax expense from 2022 to 2023 was primarily driven by higher pre-tax income.
Income Tax Expense The following table presents our income tax expense for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (Amounts in thousands, except percentages) Income tax expense $ 16,769 $ 45,335 Effective tax rate 29.0 % 27.3 % The decrease in income tax expense from 2023 to 2024 was primarily driven by the reduction in pre-tax income from 2023 to 2024.
Financing Activities The majority of our financing activities relate to our 2022 credit facility, share repurchases, net client fund obligation activity, as well as contingent consideration payments for prior acquisitions.
Cash Provided by and Used in Financing Activities The majority of our financing activities relate to our 2024 Credit Facilities, share repurchases, net client fund obligation activity, as well as contingent consideration payments for prior acquisitions.
Our debt is further discussed in Note 9, Debt and Financing Arrangements, to the accompanying consolidated financial statements. Gain on Sale of Operations, net - During the twelve months ended December 31, 2023, we recorded approximately $0.2 million additional gain related to a previously sold business as additional contingent proceeds were received.
Our debt is further discussed in Note 10, Debt and Financing Arrangements, to the accompanying consolidated financial statements. Gain on Sale of Operations, net - During the twelve months ended December 31, 2024, we recorded approximately $4.9 million gain related to a sold business in the National Practice Group.
As of December 31, 2023, we were not aware of any obligations arising under indemnification agreements that would require material payments. Interest Rate Risk Management - We do not purchase or hold any derivative instruments for trading or speculative purposes. We utilize interest rate swaps to manage interest rate risk exposure associated with our floating-rate debt under the credit facility.
As of December 31, 2024, we were not aware of any obligations arising under indemnification agreements that would require material payments. Interest Rate Risk Management - We do not purchase or hold any derivative instruments for trading or speculative purposes.
A detailed discussion of revenue by practice group is included under “Operating Practice Groups.” Net income in 2023 increased $15.6 million, or 14.8%, to $121.0 million from $105.4 million in 2022. Refer to “Results of Operations” for a detailed discussion of the components of net income.
A detailed discussion of revenue by practice group is included under “Operating Practice Groups.” Net income in 2024 decreased $80.0 million, or 66.1%, to $41.0 million from $121.0 million in 2023. Refer to “Results of Operations” for a detailed discussion of the components of net income.
In addition, G&A expenses for the year ended December 31, 2023 included a $1.5 million non-recurring transaction and integration costs related to the Somerset acquisition. G&A expenses for the year ended December 31, 2022 included a $1.3 million non-recurring transaction and integration costs related to the Marks Paneth acquisition.
G&A expenses for the year ended December 31, 2024 included a $43.7 million costs related to the Transaction. G&A expenses for the year ended December 31, 2023 included a $1.9 million non-recurring transaction and integration costs related to the Somerset acquisition.
We believe that repurchasing shares of our common stock is a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders.
We believe that repurchasing shares of our common stock can be a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders. During the year ended December 31, 2024, we completed five business acquisitions.
These funds held for clients are segregated and invested in accordance with our investment policy, which requires that all investments carry an investment grade rating at the time of initial investment.
In connection with payroll services provided to clients, we collect funds from our clients’ accounts in advance of paying these client obligations. These funds held for clients are segregated and invested in accordance with our investment policy, which requires that all investments carry an investment grade rating at the time of initial investment.
G&A expenses for the year ended December 31, 2022 included a $1.3 million non-recurring transaction and integration costs related to the Marks Paneth acquisition. Total other expense, net decreased by $26.7 million to $3.2 million from $29.9 million in 2022.
In addition, G&A expenses for the year ended December 31, 2024 included $43.7 million costs related to the Transaction. G&A expenses for the year ended December 31, 2023 included $1.9 million non-recurring transaction and integration costs related to the Somerset acquisition. Total other expense, net increased by $18.4 million to $21.6 million from $3.2 million in 2023.
Operating expenses increased by $20.1 million in 2023 as compared to 2022, primarily driven by $16.5 million, or 7.3%, higher personnel costs, attributable primarily to the amount of annual merit increases, bonus accruals, and investment in new sales producers.
Operating expenses increased by $17.8 million in 2024 as compared to 2023, primarily driven by $14.8 million, or 6.1%, higher personnel costs, attributable primarily to the amount of annual merit increases, bonus accruals, and investment in new sales producers. Compared to 2023, technology costs, direct costs, and professional service costs, increased by $1.4 million, $0.8 million, and $0.7 million, respectively.
The non-qualified deferred compensation plan increased operating expenses by $17.2 million in 2023, but decreased operating expenses by $17.3 million in 2022. Excluding the non-qualified deferred compensation expenses, operating expense decreased by approximately $4.1 million, primarily driven by $1.6 million lower personnel costs and $8.3 million higher allocation costs to other operating units.
The non-qualified deferred compensation plan increased operating expenses by $18.8 million in 2024 and by $17.2 million in 2023. Excluding the non-qualified deferred compensation expenses, operating expense increased by approximately $3.6 million, primarily driven by $5.6 million higher personnel costs, offset by $1.1 million lower marketing expenses and $0.9 million lower other miscellaneous discretionary costs.
Other Income (Expense), net - The majority of “Other income (expense), net” consists of net gains and losses associated with the value of the non-qualified deferred compensation plan as discussed above, net adjustments to the fair value of our contingent purchase price liability related to prior acquisitions, as well as gains or losses related 24 Table of Contents to the sale of assets.
During the same period in 2023, we recorded approximately $0.2 million additional gain related to a previously sold business as additional contingent proceeds were received. 30 Table of Contents Other Income (Expense), net - The majority of “Other income (expense), net” consists of net gains and losses associated with the value of the non-qualified deferred compensation plan as discussed above, net adjustments to the fair value of our contingent purchase price liability related to prior acquisitions, as well as gains or losses related to the sale of assets.
Income and expenses related to the deferred compensation plan for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (Amounts in thousands) Operating expenses (income) $ 17,192 $ (17,252) Corporate general and administrative expenses (income) $ 2,296 $ (2,393) Other income (expense), net $ 19,488 $ (19,645) 22 Table of Contents Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the years ended December 31, 2023 and 2022: Year Ended December 31, Year Ended December 31, 2023 2022 (Amounts in thousands, except percentages) As Reported NQDCP Adjusted % of Revenue As Reported NQDCP Adjusted % of Revenue Gross margin $ 223,204 $ 17,192 $ 240,396 15.1 % $ 223,367 $ (17,252) $ 206,115 14.6 % Operating income 165,239 19,488 184,727 11.6 % 168,344 (19,645) 148,699 10.5 % Other income (expense), net 21,019 (19,488) 1,531 0.1 % (19,243) 19,645 402 — % Income before income tax expense 166,303 — 166,303 10.5 % 141,475 — 141,475 10.0 % Operating Expenses The following table presents our operating expenses for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (Amounts in thousands, except percentages) Operating expenses $ 1,367,990 $ 1,188,612 Operating expenses % of revenue 86.0 % 84.2 % Operating expenses excluding deferred compensation $ 1,350,798 $ 1,205,864 Operating expenses excluding deferred compensation % of revenue 84.9 % 85.4 % Our operating expenses increased by $179.4 million.
Income and expenses related to the deferred compensation plan for the years ended December 31, 2024 and 2023: 28 Table of Contents Year Ended December 31, 2024 2023 (Amounts in thousands) Operating expenses $ 18,776 $ 17,192 Corporate general and administrative expenses $ 2,367 $ 2,296 Other income, net $ 21,143 $ 19,488 Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the years ended December 31, 2024 and 2023: Year Ended December 31, Year Ended December 31, 2024 2023 (Amounts in thousands, except percentages) As Reported NQDCP Adjusted % of Revenue As Reported NQDCP Adjusted % of Revenue Gross margin $ 182,469 $ 18,776 $ 201,245 11.1 % $ 223,204 $ 17,192 $ 240,396 15.1 % Operating income 73,716 21,143 94,859 5.2 % 165,239 19,488 184,727 11.6 % Other income (expense), net 13,538 (21,143) (7,605) (0.4) % 21,019 (19,488) 1,531 0.1 % Income before income tax expense 57,807 — 57,807 3.2 % 166,303 — 166,303 10.4 % Operating Expenses The following table presents our operating expenses for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (Amounts in thousands, except percentages) Operating expenses $ 1,631,003 $ 1,367,990 Operating expenses % of revenue 89.9 % 86.0 % Operating expenses excluding deferred compensation $ 1,612,227 $ 1,350,798 Operating expenses excluding deferred compensation % of revenue 88.9 % 84.9 % Our operating expenses increased by $263.0 million.
Operating expenses for the year ended December 31, 2023 included approximately $1.9 million non-recurring integration and retention costs related to the Somerset acquisition, and operating expenses for the year ended December 31, 2022 included approximately $8.6 million non-recurring integration and retention costs related to the acquisition of the non-attest assets of Marks Paneth LLP ("Marks Paneth").
Operating expenses for the year ended December 31, 2024 included approximately $5.0 million costs related to the Transaction, and operating expenses for the year ended December 31, 2023 included approximately $1.9 million non-recurring integration and retention costs related to the acquisition of Somerset CPAs and Advisors ("Somerset").
The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share. Interest Expense - Our primary financing arrangement is the 2022 credit facility. Interest expense was $20.1 million in 2023, compared to $8.0 million in 2022.
The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share. Interest Expense - On November 1, 2024 we entered into the 2024 Credit Facilities. Interest expense was $34.4 million in 2024, compared to $20.1 million in 2023.
Cash provided by operating activities was $126.1 million during 2022, consisting of net income of $105.4 million and certain non-cash items, such as depreciation and amortization expense of $32.9 million, share-based compensation expense of $14.7 million, deferred income tax of $13.9 million, bad debt expense of $1.2 million, adjustment to the fair value of contingent purchase consideration of $2.4 million, as well as $42.0 million of cash generated from working capital management.
Cash Provided by Operating Activities 2024 compared to 2023 - Cash provided by operating activities was $123.7 million during 2024, consisting of net income of $41.0 million and certain non-cash items, such as depreciation and amortization expense of $48.1 million, share-based compensation expense of $13.8 million, bad debt expense of $3.8 million, adjustment to the fair value of contingent purchase consideration of $7.0 million, and $23.4 million use of cash from working capital management offset by deferred income tax of $8.6 million and $4.93 million gain on sale of operations, net of tax.
We believe that cash provided by operations, as well as available funds under the 2022 credit facility will be sufficient to meet cash requirements for the next 12 months and beyond. 29 Table of Contents OBLIGATIONS AND COMMITMENTS Off-Balance Sheet Arrangements - We maintain ASAs with independent CPA firms (as described more fully under “Business - Financial Services” and in Note 1, Basis of Presentation and Significant Accounting Policies, to the accompanying consolidated financial statements), which qualify as variable interest entities.
OBLIGATIONS AND COMMITMENTS Off-Balance Sheet Arrangements - We maintain ASAs with independent CPA firms (as described more fully under “Business - Financial Services” and in Note 1, Basis of Presentation and Significant Accounting Policies, to the accompanying consolidated financial statements), which qualify as variable interest entities.
National Practices Year Ended December 31, 2023 2022 $ Change % Change (Amounts in thousands, except percentages) Revenue Same-unit $ 47,903 $ 43,904 $ 3,999 9.1 % Operating expenses 43,060 39,201 3,859 9.8 % Gross margin / Operating income $ 4,843 $ 4,703 $ 140 3.0 % Total other income, net $ 1 $ 10 $ (9) (90.0) % Income before income tax expenses $ 4,844 $ 4,713 $ 131 2.8 % Gross margin percentage 10.1 % 10.7 % Revenue growth in this practice group was primarily driven by our cost-plus contract with a single client, which has existed since 1999.
National Practices Year Ended December 31, 2024 2023 $ Change % Change (Amounts in thousands, except percentages) Revenue Same-unit $ 49,885 $ 43,966 $ 5,919 13.5 % Divested operation — 3,937 (3,937) N/M Total revenue 49,885 47,903 1,982 4.1 % Operating expenses 44,625 43,060 1,565 3.6 % Gross margin / Operating income $ 5,260 $ 4,843 $ 417 8.6 % Total other income, net 4,929 1 4,928 N/M Income before income tax expenses $ 10,189 $ 4,844 $ 5,345 110.3 % Gross margin percentage 10.5 % 10.1 % Revenue growth in this practice group was primarily driven by our cost-plus contract with a single client, which has existed since 1999.
Benefits and Insurance Services Year Ended December 31, 2023 2022 $ Change % Change (Amounts in thousands, except percentages) Revenue Same-unit $ 381,200 $ 358,007 $ 23,193 6.5 % Acquired businesses 1,405 — 1,405 Total revenue 382,605 358,007 24,598 6.9 % Operating expenses 310,510 290,387 20,123 6.9 % Gross margin / Operating income $ 72,095 $ 67,620 $ 4,475 6.6 % Total other income, net $ 2,058 $ 2,386 $ (328) (13.7) % Income before income tax expenses $ 74,153 $ 70,006 $ 4,147 5.9 % Gross margin percentage 18.8 % 18.9 % The Benefits and Insurance Services practice group revenue in 2023 grew by 6.9% to $382.6 million from $358.0 million in 2022.
Benefits and Insurance Services Year Ended December 31, 2024 2023 $ Change % Change (Amounts in thousands, except percentages) Revenue Same-unit $ 397,865 $ 382,605 $ 15,260 4.0 % Acquired businesses 3,183 — 3,183 Total revenue 401,048 382,605 18,443 4.8 % Operating expenses 328,272 310,510 17,762 5.7 % Gross margin / Operating income $ 72,776 $ 72,095 $ 681 0.9 % Total other income, net 149 2,058 (1,909) (92.8) % Income before income tax expenses $ 72,925 $ 74,153 $ (1,228) (1.7) % Gross margin percentage 18.1 % 18.8 % The Benefits and Insurance Services practice group revenue in 2024 grew by 4.8% to $401.0 million from $382.6 million in 2023.
Cash Requirements - Cash requirements for 2024 and beyond will generally include acquisitions, interest payments on debt, seasonal working capital requirements, contingent earnout payments for previous acquisitions, share repurchases, income tax payments, and capital expenditures.
Cash Requirements - Cash requirements for the remainder of 2025 and beyond will include the repayment of outstanding debt and related interest, making strategic acquisitions, funding seasonal working capital requirements, making contingent purchase price payments for previous acquisitions, share repurchases, income tax payments, and capital expenditures.
Compared to the same period in 2022, corporate allocated costs, travel and entertainment costs, depreciation and amortization costs, technology costs, direct costs, facility costs, and marketing costs increased by $6.2 million, $5.6 million, $3.4 million, $3.1 million, $2.3 million, $1.8 million, and $1.0 million, respectively, to support business growth. In addition, bad debt expense increased by $0.6 million.
Compared to the same period in 2023, direct costs, depreciation and amortization expense, facility costs, technology costs, travel and entertainment costs, professional service costs, and allocations increased by $15.8 million, $11.6 million, $10.7 million, $7.9 million, $7.1 million, $5.9 million, and $1.6 million, respectively, as well as $1.0 million lower other discretionary costs to support business growth.
Under these interest rate swap contracts, we receive cash flows from counterparties at variable rates based on the Secured Overnight Financing Rate (“SOFR”) and pay the counterparties a fixed rate. To mitigate counterparty credit risk, we only enter into contracts with selected major financial institutions with investment grade ratings and continually assess their creditworthiness.
We utilize interest rate swaps to manage interest rate risk exposure associated with our floating-rate debt under the 2024 Credit Facilities. Under these interest rate swap contracts, we receive cash flows from counterparties at variable rates based on the Secured Overnight Financing Rate (“SOFR”) and pay the counterparties a fixed rate.
Earnings per diluted share were $2.39 in 2023, compared to $2.01 in 2022, with a fully diluted weighted average share count of 50.6 million shares in 2023, compared to 52.4 million shares in 2022. Strategic Use of Capital - Our first priority for the use of capital is to make strategic acquisitions.
Earnings per diluted share was $0.78 in 2024, compared to $2.39 in 2023, with a fully diluted weighted average share count of 52.7 million shares in 2024, compared to 50.6 million shares in 2023.
Operating Practice Groups We deliver our integrated services through three practice groups: Financial Services, Benefits and Insurance Services and National Practices. A description of these groups’ operating results and factors affecting their businesses is provided below.
A description of these groups’ operating results and factors affecting their businesses is provided below.
Excluding the impact of the non-qualified deferred compensation plan, G&A expenses decreased by $1.7 million in 2023 as compared to the prior year, attributable to $2.4 million lower personnel costs, offset by $0.7 million higher legal and other professional related costs as compared to 2022.
Total G&A expenses increased by approximately $50.8 million, or 87.6%, in 2024 as compared to 2023. The non-qualified deferred compensation plan increased G&A expenses by $2.4 million in 2024 and by $2.3 million in 2023. Excluding the impact of the deferred compensation plan, G&A expenses increased by $50.7 million in 2024 as compared to prior year.
The increase in operating costs was driven by $121.6 million higher personnel cost (of which acquisitions contributed approximately $50.3 million), $9.0 million higher travel and entertainment costs, $3.4 million higher facility costs, $4.9 million higher computer and technology related costs, $3.4 million higher depreciation and amortization expense, as well as $1.7 million higher marketing expense.
The increase in operating costs was driven by $194.5 million higher personnel cost (of which the Transaction contributed approximately $128.6 million), $14.1 million higher direct costs, $11.3 million higher depreciation and amortization costs, $10.9 million higher facility costs, $10.7 million higher technology costs, $10.2 million higher travel and entertainment costs, $7.6 million higher professional fees, and $2.2 million higher bad debt expense.The increases were offset by a $0.1 million decrease in other discretionary spending.
The increase was driven by $12.1 million higher interest expense due to higher average debt balance as well as higher weighted average effective interest rate experienced in 2023 as compared to 2022, and $0.3 million higher other miscellaneous expenses.
The increase was driven by $14.2 million higher interest expense due to the borrowing under the 2024 Credit Facilities to finance the Transaction, as well as higher blended weighted average effective interest rate experienced in 2024 as compared to 2023, $4.4 million higher contingent earnout expense associated with prior acquisitions, and $2.5 million higher other miscellaneous expenses.
Year Ended December 31, 2023 2022 $ Change % Change (Amounts in thousands, except percentages) Operating expenses $ 39,344 $ 8,986 $ 30,358 N/M Corporate general and administrative expenses 57,965 55,023 $ 2,942 5.3 % Operating loss $ (97,309) $ (64,009) $ (33,300) 52.0 % Total other expense, net (3,213) (29,947) $ 26,734 N/M Loss before income taxes $ (100,522) $ (93,956) $ (6,566) 7.0 % Total operating expenses increased by $30.4 million in 2023 as compared to 2022.
Year Ended December 31, 2024 2023 $ Change % Change (Amounts in thousands, except percentages) Operating expenses $ 44,485 $ 39,344 $ 5,141 13.1 % Corporate general and administrative expenses 108,753 57,965 50,788 87.6 % Operating loss $ (153,238) $ (97,309) $ (55,929) 57.5 % Total other expense, net (21,609) (3,213) (18,396) N/M Loss before income taxes $ (174,847) $ (100,522) $ (74,325) 73.9 % Total operating expenses increased by $5.1 million in 2024 as compared to 2023.
Financial Services Year Ended December 31, 2023 2022 $ Change % Change (Amounts in thousands, except percentages) Revenue Same-unit $ 1,086,894 $ 1,010,068 $ 76,826 7.6 % Acquired businesses 73,792 — 73,792 Total revenue 1,160,686 1,010,068 150,618 14.9 % Operating expenses 975,076 850,038 125,038 14.7 % Gross margin / Operating income $ 185,610 $ 160,030 $ 25,580 16.0 % Total other income (expense), net $ 2,218 $ 682 $ 1,536 N/M Income before income tax expense $ 187,828 $ 160,712 $ 27,116 16.9 % Gross margin percentage 16.0 % 15.8 % The Financial Services practice group revenue in 2023 grew by 14.9% to $1,160.7 million from $1,010.1 million in 2022.
Financial Services Year Ended December 31, 2024 2023 $ Change % Change (Amounts in thousands, except percentages) Revenue Same-unit $ 1,216,364 $ 1,160,686 $ 55,678 4.8 % Acquired businesses 146,175 — 146,175 Total revenue 1,362,539 1,160,686 201,853 17.4 % Operating expenses 1,213,621 975,076 238,545 24.5 % Gross margin / Operating income $ 148,918 $ 185,610 $ (36,692) (19.8) % Total other income, net 622 2,218 (1,596) (72.0) % Income before income tax expense $ 149,540 $ 187,828 $ (38,288) (20.4) % Gross margin percentage 10.9 % 16.0 % The Financial Services practice group revenue in 2024 grew by 17.4% to $1,362.5 million from $1,160.7 million in 2023.
Fair value measurements require extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. In addition, we recognize and measure contingent consideration at fair value as of the acquisition date using a probability-weighted discounted cash flow model.
Fair value measurements require extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. As we finalize the estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months from the acquisition date).
Operating results for Somerset are reported in the Financial Services practice group. • Effective June 1, 2023, we acquired all of the assets of Pivot Point Security ("PPS"). PPS, based in Hamilton, New Jersey, is a provider of cyber and information security, and compliance services for small and middle market businesses.
Operating results for EIIA are reported in the Benefits and Insurance Services practice group. • Effective October 1, 2024, we acquired all of the assets of Hoover Financial Advisors, Inc ("Hoover Financial Advisors"). Hoover Financial Advisors, based in Indianapolis, Indiana, is a provider of financial planning advice for individuals, families, and small businesses.
The fair value of contingent consideration obligations that are classified as liabilities are reassessed each reporting period. Any change in the fair value estimate is recorded in the earnings of that period. Goodwill and Other Intangible Assets - Goodwill represents the difference between the purchase price of the acquired business and the related fair value of the net assets acquired.
In addition, we recognize and measure contingent consideration at fair value as of the acquisition date using a probability-weighted discounted cash flow model. The fair value of contingent consideration obligations that are classified as liabilities are reassessed each reporting period. Any change in the fair value estimate is recorded in the earnings of that period.
A significant portion of our assets in the accompanying Consolidated Balance Sheets is goodwill. At December 31, 2023, the carrying value of goodwill totaled $865.2 million, compared to total assets of $2.0 billion and total stockholders’ equity of $791.6 million. Intangible assets consist of identifiable intangibles other than goodwill.
At December 31, 2024, the carrying value of goodwill totaled $2,331.5 million, compared to total assets of $4,470.9 million and total stockholders’ equity of $1,780.0 million. Intangible assets consist of identifiable intangibles other than goodwill. Identifiable intangible assets other than goodwill include client lists and non-compete agreements, which require significant judgments in determining the fair value.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt each respective balance sheet date, these investments are adjusted to fair value with fair value adjustments being recorded to other comprehensive income or loss for the respective period.
Biggest changeAt each respective balance sheet date, these investments are adjusted to fair value with fair value adjustments being recorded to other comprehensive income or loss for the respective period. Refer to Note 7, Financial Instruments, and Note 8, Fair Value Measurements, to the accompanying consolidated financial statements for further discussion regarding these investments and the related fair value assessments.
As of December 31, 2023 we have the following interest rate swaps outstanding (in thousands): December 31, 2023 Notional Amount Fixed Rate Expiration Interest rate swap $ 50,000 0.834 % 4/14/2025 Interest rate swap $ 30,000 1.186 % 12/14/2026 Interest rate swap $ 20,000 2.450 % 8/14/2027 Interest rate swap $ 25,000 3.669 % 4/14/2028 Interest rate swap $ 25,000 4.488 % 10/14/2028 Refer to Note 6, Financial Instruments, to the accompanying consolidated financial statements for further discussion regarding interest rate swaps.
As of December 31, 2024, we have the following interest rate swaps outstanding (in thousands): December 31, 2024 Notional Amount Fixed Rate Expiration Interest rate swap $ 50,000 0.834% 4/14/2025 Interest rate swap $ 30,000 1.186% 12/14/2026 Interest rate swap $ 20,000 2.450% 8/14/2027 Interest rate swap $ 25,000 3.669% 4/14/2028 Interest rate swap $ 25,000 4.488% 10/14/2028 Refer to Note 7, Financial Instruments, to the accompanying consolidated financial statements for further discussion regarding interest rate swaps.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We do not purchase or hold any derivative instruments for trading or speculative purposes. We utilize interest rate swaps to manage interest rate risk exposure associated with our floating-rate debt under the credit facility.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We do not purchase or hold any derivative instruments for trading or speculative purposes. We utilize interest rate swaps to manage interest rate risk exposure associated with our floating-rate debt under the 2024 Credit Facilities.
In connection with our payroll business, funds held for clients are segregated and invested in short-term investments, such as corporate and municipal bonds. In accordance with our investment policy, all investments carry an investment grade rating at the time of the initial investment.
In connection with our payroll business, funds held for clients are segregated and invested in short-term investments, such as corporate and municipal bonds. In accordance with our investment policy, all investments 38 Table of Contents carry an investment grade rating at the time of the initial investment.
Interest rate risk results when the maturity or repricing intervals of interest-earning assets and interest-bearing liabilities are different. A change in the Federal Funds Rate, or the reference rate set by Bank of America, N.A., would affect the rate at which we could borrow funds under the 2022 credit facility.
Interest rate risk results when the maturity or repricing intervals of interest-earning assets and interest-bearing liabilities are different. A change in the Federal Funds Rate, or the reference rate set by Bank of America, N.A., would affect the rate at which we could borrow funds under the 2024 Credit Facilities.
Our balance outstanding under the 2022 credit facility at December 31, 2023 was $312.4 million, of which $162.4 million is subject to rate risk. If market rates were to increase or decrease 100 basis points from the levels at December 31, 2023, interest expense would increase or decrease approximately $1.6 million annually.
Our balance outstanding under the 2024 Credit Facilities at December 31, 2024 was $1,420.9 million, of which $1,270.9 million is subject to rate risk. If market rates were to increase or decrease 100 basis points from the levels at December 31, 2024, interest expense would increase or decrease approximately $12.7 million annually.
Removed
Refer to Notes 6, Financial Instruments, and Note 7, Fair Value Measurements, to the accompanying consolidated financial statements for further discussion regarding these investments and the related fair value assessments. 32 Table of Contents

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