Baldwin Revenue Rises 31% to $480.3 Million Despite Quarterly Accounting Loss
Key Facts
The Baldwin Group reported results on Nov. 9 for the third quarter ended Sept. 30, 2026, with total revenue of $480.3 million, up 31% year over year. Organic revenue growth, which excludes revenue from new partnerships during their first 12 months and revenue from businesses that have been divested, was 6%. On an adjusted basis, net income rose to $59.4 million, and adjusted diluted earnings per share increased 35% to $0.42. Under generally accepted accounting principles, the company recorded a net loss of $81.6 million and a diluted loss of $0.63 per share. The divergence between the two measures reflects growth in business activity and revenue alongside the effect of accounting items and costs that increased during the quarter, according to the company's filing with the U.S. Securities and Exchange Commission.
Adjusted operating earnings rose 47% to $106.9 million. The adjusted measure's margin widened to 22.2%, compared with 19.8% in the third quarter of 2025, an increase of 240 basis points. The increase came alongside growth in total revenue, while organic revenue growth remained at 6%, distinguishing growth in the existing business from revenue included in the total that the company does not count in its organic measure. The company said organic revenue growth excludes commissions and fees from new partnerships during their first 12 months, as well as revenue from businesses it has sold. In the insurance advisory solutions segment, pricing weakness and risk exposure weighed on commission and fee growth; the adverse impact was 90 basis points in the first nine months of 2026, particularly in commercial property insurance lines.
The company generated $54.2 million in cash from operating activities during the quarter, while adjusted free cash flow rose 33% year over year to $55.6 million. On Sept. 30, cash and cash equivalents totaled $188.6 million, alongside $289.1 million of available borrowing capacity under its revolving credit facility. Financing costs, however, increased: net interest expense rose $11.8 million compared with the same period in 2025. The company attributed this to higher average borrowings, partly offset by a lower average interest rate. It said it expects interest expense to continue rising year over year in the near term as it increases borrowing to fund partnerships and settle deferred payment obligations.
Among the items affecting the accounting result was a loss from changes in the fair value of contingent consideration, which totaled $17.6 million in the quarter, compared with a loss of $2.0 million in the same period in 2025. The company linked the change to improved expected performance at some acquired businesses, which led to higher earn-out liabilities, as well as the approaching maturity of certain obligations. Higher interest rates offset part of the loss, according to its quarterly filing. Other operating expenses in the corporate and other segment also increased by $24.5 million from the year-earlier quarter. Most of the increase came from a $22.6 million rise in professional expenses, which the company attributed to higher legal spending, particularly related to the take-private transaction.
The results come as the company is subject to a merger agreement signed on Sept. 14, 2026, for its acquisition in an all-cash transaction at $32.50 per share for shareholders. The company expects the deal to close in the first quarter of 2027, subject to shareholder and regulatory approvals and customary closing conditions. The company's shares, listed under the ticker BWIN, closed at $31.98 on Nov. 6, 2026, according to EL7 data. The cash consideration set out in the agreement is directly tied to what shareholders would receive if the deal closes on the announced terms. The chief executive said in the second-quarter results that the company had largely moved past exceptional one-time headwinds and expected them to become tailwinds in the second half of 2026.