Xencor restates FY2023 and Q1-Q3 2024 results; errors in royalty accounting and tax

Xencor Inc

Royalty transaction with OMERS Life Sciences misclassified as deferred income instead of debt; impacted balance sheet by ~$168.5M debt understatement.
Estimated FY2023 impact: revenue understated by $6.3M, interest expense understated by $5.5M; operating cash flow overstated by $163M.
Additional tax errors: R&D expense under Section 174 and state tax lead to ~$7.8M shareholder equity overstatement for FY2023.
Material weaknesses identified in internal control over financial reporting related to both royalty and tax errors.
RSM US LLP recalls its audit reports on 2023 financials and internal controls; company will file amendments before 2024 10-K.

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