UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-10994

VIRTUS INVESTMENT PARTNERS, INC.

(Exact name of registrant as specified in its charter)



Delaware						26-3962811
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One Financial Plaza, Hartford, CT 06103

(Address of principal executive offices, including Zip Code)

(800) 248-7971

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

VRTS

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock was ~~7,651,606~~7,275,337 as of July ~~23, 2021.~~29, 2022.

Table of Contents

VIRTUS INVESTMENT PARTNERS, INC.

INDEX


		Page
Part I. FINANCIAL INFORMATION
Item 1.	Financial Statements ~~(Unaudited)~~
	Condensed Consolidated Balance Sheets (Unaudited) as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021	1
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021	2
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021	3
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021	4
	Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the Three and Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3129
Item 4.	Controls and Procedures	3130

Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	3330
Item 1A.	Risk Factors	3330
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3330
Item 6.	Exhibits	3431
	Signatures	3532

"We," "us," "our," the "Company," and "Virtus" as used in this Quarterly Report on Form 10-Q refer to Virtus Investment Partners, Inc., a Delaware corporation, and its subsidiaries.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Virtus Investment Partners, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(in thousands, except share data)	(in thousands, except share data)	June 30, 2021		December 31, 2020		(in thousands, except share data)	June 30, 2022		December 31, 2021
Assets:	Assets:					Assets:
Cash and cash equivalents	Cash and cash equivalents	$	275,439	$	246,511	Cash and cash equivalents	$	250,530	$	378,921
Investments	Investments	81,775		64,944		Investments	102,840		108,890
Accounts receivable, net	Accounts receivable, net	120,122		84,499		Accounts receivable, net	108,248		123,873
Assets of consolidated investment products ("CIP")	Assets of consolidated investment products ("CIP")					Assets of consolidated investment products ("CIP")
Cash and cash equivalents of CIP	Cash and cash equivalents of CIP	129,816		86,980		Cash and cash equivalents of CIP	107,674		206,620
Cash pledged or on deposit of CIP	Cash pledged or on deposit of CIP	602		6,358		Cash pledged or on deposit of CIP	627		604
Investments of CIP	Investments of CIP	2,271,843		2,333,277		Investments of CIP	1,990,159		2,140,238
Other assets of CIP	Other assets of CIP	45,046		13,430		Other assets of CIP	17,041		44,210
Furniture, equipment and leasehold improvements, net	Furniture, equipment and leasehold improvements, net	12,896		14,488		Furniture, equipment and leasehold improvements, net	19,016		12,542

Intangible assets, net	Intangible assets, net	380,824		280,264		Intangible assets, net	482,085		500,571
Goodwill	Goodwill	315,366		290,366		Goodwill	347,423		338,406
Deferred taxes, net	Deferred taxes, net	11,054		9,538		Deferred taxes, net	21,721		19,204
Other assets	Other assets	48,039		36,288		Other assets	96,551		60,102
Total assets	Total assets	$	3,692,822	$	3,466,943	Total assets	$	3,543,915	$	3,934,181
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Liabilities:	Liabilities:					Liabilities:
Accrued compensation and benefits	Accrued compensation and benefits	$	96,509	$	122,514	Accrued compensation and benefits	$	105,106	$	187,449
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	45,755		25,357		Accounts payable and accrued liabilities	40,800		48,496
Dividends payable	Dividends payable	8,565		9,013		Dividends payable	13,861		14,824
Contingent consideration (Note 4)	Contingent consideration (Note 4)	137,664		0		Contingent consideration (Note 4)	133,628		162,564
Debt	Debt	190,224		201,212		Debt	255,832		266,346
Other liabilities	Other liabilities	38,387		36,120		Other liabilities	93,502		60,225
Liabilities of CIP	Liabilities of CIP					Liabilities of CIP
Notes payable of CIP	Notes payable of CIP	2,132,012		2,190,445		Notes payable of CIP	1,904,444		2,033,617
Securities purchased payable and other liabilities of CIP	Securities purchased payable and other liabilities of CIP	122,344		45,829		Securities purchased payable and other liabilities of CIP	65,890		185,068
Total liabilities	Total liabilities	2,771,460		2,630,490		Total liabilities	2,613,063		2,958,589
Commitments and Contingencies (Note 14)	Commitments and Contingencies (Note 14)	0		0		Commitments and Contingencies (Note 14)	0		0
Redeemable noncontrolling interests	Redeemable noncontrolling interests	131,525		115,513		Redeemable noncontrolling interests	139,147		138,965
Equity:	Equity:					Equity:
Equity attributable to stockholders:
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 11,905,842 shares issued and 7,651,606 shares outstanding at June 30, 2021, respectively, and 11,790,869 shares issued and 7,583,466 shares outstanding at December 31, 2020, respectively		119		118
Equity attributable to Virtus Investment Partners, Inc.:						Equity attributable to Virtus Investment Partners, Inc.:
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 12,023,288 shares issued and 7,275,337 shares outstanding at June 30, 2022; and 11,906,747 shares issued and 7,506,151 shares outstanding at December 31, 2021						Common stock, $0.01 par value, 1,000,000,000 shares authorized; 12,023,288 shares issued and 7,275,337 shares outstanding at June 30, 2022; and 11,906,747 shares issued and 7,506,151 shares outstanding at December 31, 2021	120		119
Additional paid-in capital	Additional paid-in capital	1,280,667		1,298,002		Additional paid-in capital	1,275,907		1,276,424
Retained earnings (accumulated deficit)	Retained earnings (accumulated deficit)	(35,704)		(135,259)		Retained earnings (accumulated deficit)	88,196		60,962
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	35		29		Accumulated other comprehensive income (loss)	(267)		20
Treasury stock, at cost, 4,254,236 and 4,207,403 shares at June 30, 2021 and December 31, 2020, respectively		(464,248)		(451,749)
Total equity attributable to stockholders		780,869		711,141
Treasury stock, at cost, 4,747,951 and 4,400,596 shares at June 30, 2022 and December 31, 2021, respectively						Treasury stock, at cost, 4,747,951 and 4,400,596 shares at June 30, 2022 and December 31, 2021, respectively	(579,248)		(509,248)
Total equity attributable to Virtus Investment Partners, Inc.						Total equity attributable to Virtus Investment Partners, Inc.	784,708		828,277
Noncontrolling interests	Noncontrolling interests	8,968		9,799		Noncontrolling interests	6,997		8,350
Total equity	Total equity	789,837		720,940		Total equity	791,705		836,627
Total liabilities and equity	Total liabilities and equity	$	3,692,822	$	3,466,943	Total liabilities and equity	$	3,543,915	$	3,934,181

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Virtus Investment Partners, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	(in thousands, except per share data)	2021		2020		2021		2020		(in thousands, except per share data)	2022		2021		2022		2021
Revenues	Revenues									Revenues
Investment management fees	Investment management fees	$	193,510	$	110,550	$	366,779	$	230,838	Investment management fees	$	185,024	$	193,510	$	391,841	$	366,779
Distribution and service fees	Distribution and service fees	23,450		8,889		43,798		18,349		Distribution and service fees	17,159		23,450		37,166		43,798
Administration and shareholder service fees	Administration and shareholder service fees	25,877		13,289		48,437		27,942		Administration and shareholder service fees	21,982		25,877		46,326		48,437
Other income and fees	Other income and fees	1,174		166		1,894		331		Other income and fees	1,142		1,174		2,414		1,894
Total revenues	Total revenues	244,011		132,894		460,908		277,460		Total revenues	225,307		244,011		477,747		460,908
Operating Expenses	Operating Expenses									Operating Expenses
Employment expenses	Employment expenses	87,630		60,163		179,389		126,293		Employment expenses	89,360		87,630		195,353		179,389
Distribution and other asset-based expenses	Distribution and other asset-based expenses	36,021		17,345		68,315		36,754		Distribution and other asset-based expenses	28,583		36,021		61,429		68,315
Other operating expenses	Other operating expenses	21,946		17,436		41,526		36,321		Other operating expenses	31,559		21,946		63,271		41,526
Operating expenses of consolidated investment products ("CIP")	Operating expenses of consolidated investment products ("CIP")	659		2,179		1,218		8,928		Operating expenses of consolidated investment products ("CIP")	649		659		1,389		1,218
Restructuring and severance		0		420		0		420
Change in fair value of contingent consideration										Change in fair value of contingent consideration	2,900		—		2,900		—

Depreciation expense	Depreciation expense	981		1,196		2,079		2,454		Depreciation expense	962		981		1,897		2,079
Amortization expense	Amortization expense	10,363		7,533		19,828		15,066		Amortization expense	14,624		10,363		29,286		19,828
Total operating expenses	Total operating expenses	157,600		106,272		312,355		226,236		Total operating expenses	168,637		157,600		355,525		312,355
Operating Income (Loss)	Operating Income (Loss)	86,411		26,622		148,553		51,224		Operating Income (Loss)	56,670		86,411		122,222		148,553
Other Income (Expense)	Other Income (Expense)									Other Income (Expense)
Realized and unrealized gain (loss) on investments, net	Realized and unrealized gain (loss) on investments, net	2,494		7,114		3,385		(430)		Realized and unrealized gain (loss) on investments, net	(10,543)		2,494		(13,525)		3,385
Realized and unrealized gain (loss) of CIP, net	Realized and unrealized gain (loss) of CIP, net	2,747		(6,744)		(1,940)		(15,413)		Realized and unrealized gain (loss) of CIP, net	(21,659)		2,747		(35,003)		(1,940)
Other income (expense), net	Other income (expense), net	826		(805)		2,597		(193)		Other income (expense), net	571		826		858		2,597
Total other income (expense), net	Total other income (expense), net	6,067		(435)		4,042		(16,036)		Total other income (expense), net	(31,631)		6,067		(47,670)		4,042
Interest Income (Expense)	Interest Income (Expense)									Interest Income (Expense)
Interest expense	Interest expense	(2,256)		(3,126)		(4,570)		(6,325)		Interest expense	(2,825)		(2,256)		(5,104)		(4,570)
Interest and dividend income	Interest and dividend income	166		242		302		994		Interest and dividend income	529		166		857		302
Interest and dividend income of investments of CIP	Interest and dividend income of investments of CIP	22,562		28,634		46,438		57,863		Interest and dividend income of investments of CIP	22,412		22,562		42,792		46,438
Interest expense of CIP	Interest expense of CIP	(14,452)		(28,150)		(28,900)		(52,636)		Interest expense of CIP	(14,416)		(14,452)		(26,504)		(28,900)
Total interest income (expense), net	Total interest income (expense), net	6,020		(2,400)		13,270		(104)		Total interest income (expense), net	5,700		6,020		12,041		13,270
Income (Loss) Before Income Taxes	Income (Loss) Before Income Taxes	98,498		23,787		165,865		35,084		Income (Loss) Before Income Taxes	30,739		98,498		86,593		165,865
Income tax expense (benefit)	Income tax expense (benefit)	22,401		7,578		37,554		17,869		Income tax expense (benefit)	16,480		22,401		33,215		37,554
Net Income (Loss)	Net Income (Loss)	76,097		16,209		128,311		17,215		Net Income (Loss)	14,259		76,097		53,378		128,311
Noncontrolling interests	Noncontrolling interests	(13,130)		(4,930)		(28,756)		(10,221)		Noncontrolling interests	3,143		(13,130)		(2,917)		(28,756)

Net Income (Loss) Attributable to Virtus Investment Partners, Inc.	Net Income (Loss) Attributable to Virtus Investment Partners, Inc.	$	62,967	$	11,279	$	99,555	$	6,994	Net Income (Loss) Attributable to Virtus Investment Partners, Inc.	$	17,402	$	62,967	$	50,461	$	99,555
Earnings (Loss) per Share—Basic	Earnings (Loss) per Share—Basic	$	8.18	$	1.46	$	12.97	$	0.92	Earnings (Loss) per Share—Basic	$	2.34	$	8.18	$	6.73	$	12.97
Earnings (Loss) per Share—Diluted	Earnings (Loss) per Share—Diluted	$	7.86	$	1.43	$	12.39	$	0.88	Earnings (Loss) per Share—Diluted	$	2.29	$	7.86	$	6.54	$	12.39

Weighted Average Shares Outstanding—Basic	Weighted Average Shares Outstanding—Basic	7,698		7,720		7,674		7,572		Weighted Average Shares Outstanding—Basic	7,449		7,698		7,496		7,674
Weighted Average Shares Outstanding—Diluted	Weighted Average Shares Outstanding—Diluted	8,007		7,895		8,038		7,936		Weighted Average Shares Outstanding—Diluted	7,607		8,007		7,721		8,038

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Virtus Investment Partners, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Net Income (Loss)	Net Income (Loss)	$	76,097	$	16,209	$	128,311	$	17,215	Net Income (Loss)	$	14,259	$	76,097	$	53,378	$	128,311
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax of $(2) and $0 for the three months ended June 30, 2021 and 2020, respectively, and $(2) and $9 for the six months ended June 30, 2021 and 2020, respectively		0		(1)		6		(26)
Foreign currency translation adjustment, net of tax of $176 and $(2) for the three months ended June 30, 2022 and 2021, respectively, and $249 and $(2) for the six months ended June 30, 2022 and 2021, respectively.										Foreign currency translation adjustment, net of tax of $176 and $(2) for the three months ended June 30, 2022 and 2021, respectively, and $249 and $(2) for the six months ended June 30, 2022 and 2021, respectively.	(237)		0		(287)		6

Other comprehensive income (loss)	Other comprehensive income (loss)	0		(1)		6		(26)		Other comprehensive income (loss)	(237)		0		(287)		6
Comprehensive income (loss)	Comprehensive income (loss)	76,097		16,208		128,317		17,189		Comprehensive income (loss)	14,022		76,097		53,091		128,317
Comprehensive (income) loss attributable to noncontrolling interests	Comprehensive (income) loss attributable to noncontrolling interests	(13,130)		(4,930)		(28,756)		(10,221)		Comprehensive (income) loss attributable to noncontrolling interests	3,143		(13,130)		(2,917)		(28,756)
Comprehensive Income (Loss) Attributable to Virtus Investment Partners, Inc.	Comprehensive Income (Loss) Attributable to Virtus Investment Partners, Inc.	$	62,967	$	11,278	$	99,561	$	6,968	Comprehensive Income (Loss) Attributable to Virtus Investment Partners, Inc.	$	17,165	$	62,967	$	50,174	$	99,561

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Virtus Investment Partners, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended
June 30,
(in thousands) 2021 2020
Cash Flows from Operating Activities:
Net income (loss) $ 128,311 $ 17,215
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense, intangible asset and other amortization 23,196 21,557
Stock-based compensation 15,844 10,113
Amortization of deferred commissions 1,462 1,038
Payments of deferred commissions (3,241) (974)
Equity in earnings of equity method investments (2,561) 93
(Gain) loss on extinguishment of debt 0 (705)
Realized and unrealized (gains) losses on investments, net (3,381) 431
Distributions from equity method investments 1,908 726
Sales (purchases) of investments, net (3,395) 4,703
Deferred taxes, net (1,518) 5,014
Changes in operating assets and liabilities:
Accounts receivable, net and other assets (43,203) (2,032)
Accrued compensation and benefits, accounts payable, accrued liabilities and other liabilities (12,651) (52,788)
Operating activities of consolidated investment products ("CIP"):
Realized and unrealized (gains) losses on investments of CIP, net (1,961) 11,603
Purchases of investments by CIP (664,837) (920,392)
Sales of investments by CIP 790,575 442,859
Net proceeds (purchases) of short term investments by CIP 15,191 68
(Purchases) sales of securities sold short by CIP, net (88) 250
Change in other assets of CIP (126) (1,790)
Change in liabilities of CIP (345) 2,130
Amortization of discount on notes payable of CIP 0 11,169
Net cash provided by (used in) operating activities 239,180 (449,712)
Cash Flows from Investing Activities:
Capital expenditures and other asset purchases (4,336) (475)
Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net (1,191) 9,724
Net cash provided by (used in) investing activities (5,527) 9,249
Cash Flows from Financing Activities:
Payment of long term debt (11,826) (44,059)
Common stock dividends paid (13,748) (11,320)
Preferred stock dividends paid 0 (2,084)
Repurchases of common shares (12,499) (17,500)
Stock options exercised 66 114
Taxes paid related to net share settlement of restricted stock units (19,280) (5,569)
Net subscriptions received from (redemptions/distributions paid to) noncontrolling interests (6,636) (3,951)
Financing activities of CIP:
Payments on borrowings by CIP (103,722) (326,201)
Borrowings by CIP 0 781,147
Net cash provided by (used in) financing activities (167,645) 370,577
Net increase (decrease) in cash, cash equivalents and restricted cash 66,008 (69,886)
Cash, cash equivalents and restricted cash, beginning of period 339,849 321,939
Cash, cash equivalents and restricted cash, end of period $ 405,857 $ 252,053
Non-Cash Investing Activities:
Change in accrual for capital expenditures $ (47) $ (21)
Contingent consideration $ 137,664 $ 0
Non-Cash Financing Activities:
Increase (decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net $ (8,001) $ 17,137
Common stock dividends payable $ 6,277 $ 5,169
Conversion of preferred stock to common stock $ 0 $ 115,000


	Six Months Ended June 30,
(in thousands)	2022		2021
Cash Flows from Operating Activities:
Net income (loss)	$	53,378	$	128,311
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense, intangible asset and other amortization	32,223		23,196
Stock-based compensation	14,119		15,844
Amortization of deferred commissions	2,700		1,462
Payments of deferred commissions	(1,962)		(3,241)
Equity in earnings of equity method investments	(977)		(2,561)

Realized and unrealized (gains) losses on investments, net	13,562		(3,381)
Distributions from equity method investments	2,102		1,908
Sales (purchases) of investments, net	(9,952)		(3,395)
Change in fair value of contingent consideration	2,900		—

Deferred taxes, net	(2,271)		(1,518)

Changes in operating assets and liabilities:
Accounts receivable, net and other assets	31,069		(43,203)
Accrued compensation and benefits, accounts payable, accrued liabilities and other liabilities	(110,581)		(12,651)
Operating activities of consolidated investment products ("CIP"):
Realized and unrealized (gains) losses on investments of CIP, net	33,715		(1,961)
Purchases of investments by CIP	(441,042)		(664,837)
Sales of investments by CIP	417,706		790,575
Net proceeds (purchases) of short-term investments and securities sold short by CIP	(45)		15,103

Change in other assets and liabilities of CIP	967		(471)


Net cash provided by (used in) operating activities	37,611		239,180
Cash Flows from Investing Activities:
Capital expenditures and other asset purchases	(4,361)		(4,336)
Acquisition of businesses, net of cash acquired of $8,443	(19,773)		—
Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net	(308)		(1,191)



Net cash provided by (used in) investing activities	(24,442)		(5,527)

Cash Flows from Financing Activities:

Payment of long-term debt	(11,375)		(11,826)


Common stock dividends paid	(24,190)		(13,748)

Repurchase of common shares	(70,000)		(12,499)

Payment of contingent consideration	(33,036)		—
Taxes paid related to net share settlement of restricted stock units	(15,284)		(19,214)
Net contributions from (distributions to) noncontrolling interests	(3,598)		(6,636)
Financing activities of CIP:
Payments on borrowings by CIP	(82,694)		(103,722)

Net cash provided by (used in) financing activities	(240,177)		(167,645)

Effect of exchange rate changes on cash, cash equivalents and restricted cash	(306)		—
Net increase (decrease) in cash, cash equivalents and restricted cash	(227,314)		66,008
Cash, cash equivalents and restricted cash, beginning of period	586,145		339,849
Cash, cash equivalents and restricted cash, end of period	$	358,831	$	405,857

Non-Cash Investing Activities:

Contingent consideration	$	1,200	$	137,664
Non-Cash Financing Activities:
Increase (decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net	$	(338)	$	(8,001)

Common stock dividends payable	$	11,229	$	6,277


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		(in thousands)	June 30, 2022		December 31, 2021
Reconciliation of cash, cash equivalents and restricted cash	Reconciliation of cash, cash equivalents and restricted cash					Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	Cash and cash equivalents	$	275,439	$	246,511	Cash and cash equivalents	$	250,530	$	378,921
Cash of CIP	Cash of CIP	129,816		86,980		Cash of CIP	107,674		206,620
Cash pledged or on deposit of CIP	Cash pledged or on deposit of CIP	602		6,358		Cash pledged or on deposit of CIP	627		604
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	405,857	$	339,849	Cash, cash equivalents and restricted cash at end of period	$	358,831	$	586,145

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Virtus Investment Partners, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)


		Permanent Equity															Temporary Equity				Permanent Equity																													Temporary Equity
		Common Stock			Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Attributed To Stockholders		Non- controlling Interests		Total Equity					Redeemable Non- controlling Interests				Common Stock								Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)			Treasury Stock							Total Attributed To Virtus Investment Partners, Inc.		Non- controlling Interests			Total Equity			Redeemable Non- controlling Interests
(in thousands, except per share data)	(in thousands, except per share data)	Shares	Par Value							Shares		Amount												(in thousands, except per share data)		Shares				Par Value	Accumulated Other Comprehensive Income (Loss)															Redeemable Non- controlling Interests												Amount
Balances at March 31, 2020		7,695,413	$	117		$	1,304,868	$	(219,501)	$	(16)	4,038,563	$	(429,249)	$	656,219	$	10,247				$	666,466				$	87,115

Net income (loss)		—	—			—		11,279		—		—	—		11,279		(1,378)					9,901					6,308

Foreign currency translation adjustments		—	—			—		—		(1)		—	—		(1)		—					(1)					—
Net subscriptions (redemptions) and other		—	—			(167)		—		—		—	—		(167)		(524)					(691)					(2,736)

Cash dividends declared ($0.67 per common share)		—	—			(5,496)		—		—		—	—		(5,496)		—					(5,496)					—
Repurchases of common shares		(74,897)	—			—		—		—		74,897	(7,500)		(7,500)		—					(7,500)					—

Issuance of common shares related to employee stock transactions		43,756	1			12		—		—		—	—		13		—					13					—
Taxes paid on stock-based compensation		—	—			(2,019)		—		—		—	—		(2,019)		—					(2,019)					—
Stock-based compensation		—	—			5,838		—		—		—	—		5,838		—					5,838					—
Balances at June 30, 2020		7,664,272	$	118		$	1,303,036	$	(208,222)	$	(17)	4,113,460	$	(436,749)	$	658,166	$	8,345				$	666,511				$	90,687
Balances at March 31, 2021	Balances at March 31, 2021	7,649,679	$	119		$	1,284,643	$	(98,671)	$	35	4,227,315	$	(456,748)	$	729,378	$	9,317				$	738,695				$	112,482	Balances at March 31, 2021	7,649,679	$	119						$	1,284,643		$	(98,671)		$	35			4,227,315		$	(456,748)		$	729,378		$	9,317		$	738,695	$	112,482

Net income (loss)	Net income (loss)	—	—			—		62,967		—		—	—		62,967		270					63,237					12,860		Net income (loss)	—	—							—			62,967			—				—		—			62,967			270			63,237		12,860

Foreign currency translation adjustments	Foreign currency translation adjustments	—	—			—		—		0		—	—		0		—					0					—		Foreign currency translation adjustments	—	—							—			—			—				—		—			—			—			—		—
Net subscriptions (redemptions) and other	Net subscriptions (redemptions) and other	—	—			—		—		—		—	—		—		(619)					(619)					6,183		Net subscriptions (redemptions) and other	—	—							—			—			—				—		—			—			(619)			(619)		6,183

Cash dividends declared ($0.82 per common share)	Cash dividends declared ($0.82 per common share)	—	—			(6,604)		—		—		—	—		(6,604)		—					(6,604)					—		Cash dividends declared ($0.82 per common share)	—	—							(6,604)			—			—				—		—			(6,604)			—			(6,604)		—
Repurchases of common shares	Repurchases of common shares	(26,921)	—			—		—		—		26,921	(7,500)		(7,500)		—					(7,500)					—		Repurchases of common shares	(26,921)	—							—			—			—				26,921		(7,500)			(7,500)			—			(7,500)		—

Issuance of common shares related to employee stock transactions	Issuance of common shares related to employee stock transactions	28,848	—			—		—		—		—	—		—		—					—					—		Issuance of common shares related to employee stock transactions	28,848	—							—			—			—				—		—			—			—			—		—
Taxes paid on stock-based compensation	Taxes paid on stock-based compensation	—	—			(4,117)		—		—		—	—		(4,117)							(4,117)					—		Taxes paid on stock-based compensation	—	—							(4,117)			—			—				—		—			(4,117)			—			(4,117)		—
Stock-based compensation	Stock-based compensation	—	—			6,745		—		—		—	—		6,745		—					6,745					—		Stock-based compensation	—	—							6,745			—			—				—		—			6,745			—			6,745		—
Balances at June 30, 2021	Balances at June 30, 2021	7,651,606	$	119		$	1,280,667	$	(35,704)	$	35	4,254,236	$	(464,248)	$	780,869	$	8,968				$	789,837				$	131,525	Balances at June 30, 2021	7,651,606	$	119						$	1,280,667		$	(35,704)		$	35			4,254,236		$	(464,248)		$	780,869		$	8,968		$	789,837	$	131,525
Balances at March 31, 2022																			Balances at March 31, 2022	7,472,829					$	120							$	1,273,802	$	81,783	$	(30)		4,526,048			$	(539,248)			$	816,427	$	7,806		$	824,233		$	138,738

Net income (loss)																			Net income (loss)	—					—								—		17,402		—			—			—				17,402		(278)			17,124			(2,865)

Foreign currency translation adjustments																			Foreign currency translation adjustments	—					—								—		—		(237)			—			—				(237)		—			(237)			—
Net subscriptions (redemptions) and other																			Net subscriptions (redemptions) and other	—					—								—		—		—			—			—				—		(531)			(531)			3,274

Cash dividends declared ($1.50 per common share)																			Cash dividends declared ($1.50 per common share)	—					—								—		(10,989)		—			—			—				(10,989)		—			(10,989)			—
Repurchases of common shares																			Repurchases of common shares	(221,903)					—								—		—		—			221,903			(40,000)				(40,000)		—			(40,000)			—

Issuance of common shares related to employee stock transactions																			Issuance of common shares related to employee stock transactions	24,411					—								—		—		—			—			—				—		—			—			—
Taxes paid on stock-based compensation																			Taxes paid on stock-based compensation	—					—								(1,870)		—		—			—			—				(1,870)					(1,870)			—
Stock-based compensation																			Stock-based compensation	—					—								3,975		—		—			—			—				3,975		—			3,975			—
Balances at June 30, 2022																			Balances at June 30, 2022	7,275,337					$	120							$	1,275,907	$	88,196	$	(267)		4,747,951			$	(579,248)			$	784,708	$	6,997		$	791,705		$	139,147


		Permanent Equity																						Temporary Equity			Permanent Equity																										Temporary Equity
		Common Stock			Preferred Stock			Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Attributed To Stockholders		Non- controlling Interests				Total Equity				Redeemable Non- controlling Interests			Common Stock						Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Treasury Stock					Total Attributed To Virtus Investment Partners, Inc.			Non- controlling Interests			Total Equity		Redeemable Non- controlling Interests
(in thousands, except per share data)	(in thousands, except per share data)	Shares	Par Value		Shares	Amount								Shares	Amount														(in thousands, except per share data)	Shares	Par Value													Shares			Amount
Balances at December 31, 2019		6,809,280	$	107	1,150,000	$	110,843	$	1,199,205	$	(215,216)	$	9	3,927,607	$	(419,249)	$	675,699	$	10,558			$	686,257			$	63,845

Balances at December 31, 2020																					Balances at December 31, 2020	7,583,466			$	118							$	1,298,002	$	(135,259)	$	29		4,207,403			$	(451,749)		$	711,141	$	9,799		$	720,940		$	115,513
Net income (loss)	Net income (loss)	—	—		—	—		—		6,994		—		—	—		6,994		(1,123)				5,871				11,344		Net income (loss)	—	—							—			99,555			—			—		—			99,555			345		99,900		28,411

Foreign currency translation adjustments		—	—		—	—		—		—		(26)		—	—		(26)		—				(26)				—
Net subscriptions (redemptions) and other		—	—		—	—		(167)		—		—		—	—		(167)		(1,090)				(1,257)				15,498
Conversion of preferred stock		912,806	9		(1,150,000)	(110,843)		110,834		—		—		—	—		—		—				0				—

Cash dividends declared ($1.34 per common share)		—	—		—	—		(11,676)		—		—		—	—		(11,676)		—				(11,676)				—
Repurchases of common shares		(185,853)	—		—	—		—		—		—		185,853	(17,500)		(17,500)		—				(17,500)				—
Issuance of common shares related to employee stock transactions		128,039	2		—	—		112		—		—		—	—		114		—				114				—
Taxes paid on stock-based compensation		—	—		—	—		(5,569)		—		—		—	—		(5,569)		—				(5,569)				—
Stock-based compensation		—	—		—	—		10,297		—		—		—	—		10,297		—				10,297				—
Balances at June 30, 2020		7,664,272	$	118	0	$	0	$	1,303,036	$	(208,222)	$	(17)	4,113,460	$	(436,749)	$	658,166	$	8,345			$	666,511			$	90,687
Balances at December 31, 2020		7,583,466	$	118	0	$	0	$	1,298,002	$	(135,259)	$	29	4,207,403	$	(451,749)	$	711,141	$	9,799			$	720,940			$	115,513

Net income (loss)		—	—		—	—		—		99,555		—		—	—		99,555		345				99,900				28,411

Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—	—		—		—		6		—	—		6		—				6				—		Foreign currency translation adjustments	—	—							—			—			6			—		—			6			—		6		—
Net subscriptions (redemptions) and other	Net subscriptions (redemptions) and other	—	—		—	—		—		—		—		—	—		—		(1,176)				(1,176)				(12,399)		Net subscriptions (redemptions) and other	—	—							—			—			—			—		—			—			(1,176)		(1,176)		(12,399)

Cash dividends declared ($1.64 per common share)	Cash dividends declared ($1.64 per common share)	—	—		—	—		(13,300)		—		—		—	—		(13,300)		—				(13,300)				—		Cash dividends declared ($1.64 per common share)	—	—							(13,300)			—			—			—		—			(13,300)			—		(13,300)		—
Repurchases of common shares	Repurchases of common shares	(46,833)	—		—	—		—		—		—		46,833	(12,499)		(12,499)		—				(12,499)				—		Repurchases of common shares	(46,833)	—							—			—			—			46,833		(12,499)			(12,499)			—		(12,499)		—
Issuance of common shares related to employee stock transactions	Issuance of common shares related to employee stock transactions	114,973	1		—	—		65		—		—		—	—		66		—				66				—		Issuance of common shares related to employee stock transactions	114,973	1							65			—			—			—		—			66			—		66		—
Taxes paid on stock-based compensation	Taxes paid on stock-based compensation	—	—		—	—		(19,280)		—		—		—	—		(19,280)						(19,280)				—		Taxes paid on stock-based compensation	—	—							(19,280)			—			—			—		—			(19,280)			—		(19,280)		—
Stock-based compensation	Stock-based compensation	—	—		—	—		15,180		—		—		—	—		15,180		—				15,180				—		Stock-based compensation	—	—							15,180			—			—			—		—			15,180			—		15,180		—
Balances at June 30, 2021	Balances at June 30, 2021	7,651,606	$	119	0	$	0	$	1,280,667	$	(35,704)	$	35	4,254,236	$	(464,248)	$	780,869	$	8,968			$	789,837			$	131,525	Balances at June 30, 2021	7,651,606	$	119						$	1,280,667		$	(35,704)		$	35		4,254,236		$	(464,248)		$	780,869		$	8,968	$	789,837	$	131,525
Balances at December 31, 2021																					Balances at December 31, 2021	7,506,151			$	119							$	1,276,424	$	60,962	$	20		4,400,596			$	(509,248)		$	828,277	$	8,350		$	836,627		$	138,965

Net income (loss)																					Net income (loss)	—			—								—		50,461		—			—			—			50,461		(335)			50,126			3,252

Foreign currency translation adjustments																					Foreign currency translation adjustments	—			—								—		—		(287)			—			—			(287)		—			(287)			—
Net subscriptions (redemptions) and other																					Net subscriptions (redemptions) and other	—			—								—		—		—			—			—			—		(1,018)			(1,018)			(3,070)

Cash dividends declared ($3.00 per common share)																					Cash dividends declared ($3.00 per common share)	—			—								—		(23,227)		—			—			—			(23,227)		—			(23,227)			—
Repurchases of common shares																					Repurchases of common shares	(347,355)			—								—		—		—			347,355			(70,000)			(70,000)		—			(70,000)			—
Issuance of common shares related to employee stock transactions																					Issuance of common shares related to employee stock transactions	116,541			1								(1)		—		—			—			—			—		—			—			—
Taxes paid on stock-based compensation																					Taxes paid on stock-based compensation	—			—								(15,284)		—		—			—			—			(15,284)					(15,284)			—
Stock-based compensation																					Stock-based compensation	—			—								14,768		—		—			—			—			14,768		—			14,768			—
Balances at June 30, 2022																					Balances at June 30, 2022	7,275,337			$	120							$	1,275,907	$	88,196	$	(267)		4,747,951			$	(579,248)		$	784,708	$	6,997		$	791,705		$	139,147

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Virtus Investment Partners, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Business

Virtus Investment Partners, Inc. (the "Company," "we," "us," "our" or "Virtus"), a Delaware corporation, operates in the investment management industry through its subsidiaries.

The Company provides investment management and related services to individuals and institutions. The Company’s retail investment management services are provided to individuals through products consisting ~~of U.S. 1940 Act~~of: mutual funds ~~and~~registered pursuant to the Investment Company Act of 1940 ("U.S. retail funds"), as amended; Undertaking for Collective Investment in Transferable Securities ("UCITS" ~~or "offshore~~) and Qualifying Investor Funds ("QIFs"), collectively "global funds" and collectively with ~~U.S. 1940 Act~~ mutual funds, ~~"open-end funds"),~~ exchange traded funds ("ETFs"), and variable insurance funds, the "open-end funds"; closed-end funds (collectively, with open-end funds, ~~and ETFs,~~the "funds"); and retail separate accounts. Institutional investment management services are offered through separate accounts and pooled or commingled structures to a variety of institutional clients. The Company also provides subadvisory services to other investment advisers and serves as the collateral manager for structured products.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Company’s financial condition and results of operations. Operating results for the six months ended June 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 ("~~2020~~2021 Annual Report on Form 10-K") filed with the Securities and Exchange Commission (the "SEC"). The Company’s significant accounting policies, which have been consistently applied, are summarized in its ~~2020~~2021 Annual Report on Form 10-K.

~~New Accounting Standards Implemented~~

~~In January 2020, the Financial Accounting Standards Board~~ ~~("FASB")~~ ~~issued Accounting Standards Update ("ASU") 2020-01,~~ ~~Investments~~-~~Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)~~. This standard clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323 and the accounting for certain forward contracts and purchased options in Topic 815. The Company adopted this standard on January 1, 2021. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740,~~ ~~Income Taxes,~~ and improves consistent application by clarifying and amending existing guidance. The Company adopted this standard on January 1, 2021. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

3. Revenues

The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers. Investment management fees, distribution and service fees, and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed. The net asset values from which ~~investment management, distribution and service, and administration and shareholder service~~these fees are calculated are variable in nature and subject to factors outside of the Company's control, such as additional investments, withdrawals and market performance. Because of this, these fees are considered constrained until the end of the contractual

~~Table of Contents~~

measurement period (monthly or quarterly), which is when asset values are generally determinable.

~~Revenue Disaggregated~~Investment Management Fees by Source

The following table summarizes investment management fees by source:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Investment management fees	Investment management fees									Investment management fees
Open-end funds	Open-end funds	$	96,795	$	54,018	$	185,667	$	113,126	Open-end funds	$	84,875	$	97,273	$	182,252	$	186,393
Closed-end funds	Closed-end funds	16,395		8,557		29,335		18,736		Closed-end funds	16,174		16,395		33,114		29,335

Retail separate accounts	Retail separate accounts	42,475		22,398		79,987		48,112		Retail separate accounts	45,312		42,475		94,915		79,987
Institutional accounts	Institutional accounts	35,782		24,606		68,220		47,523		Institutional accounts	38,663		37,367		81,560		71,064
Structured products		1,585		417		2,844		1,991

Other products		478		554		726		1,350

Total investment management fees	Total investment management fees	$	193,510	$	110,550	$	366,779	$	230,838	Total investment management fees	$	185,024	$	193,510	$	391,841	$	366,779

Table of Contents

4. ~~AllianzGI Strategic Partnership~~Acquisitions

Stone Harbor Investment Partners

On January 1, 2022, the Company completed the acquisition of Stone Harbor Investment Partners, LLC ("Stone Harbor"), which was accounted for in accordance with ASC 805, Business Combinations ("ASC 805"). The initial transaction consideration of $29.4 million was allocated to the assets acquired and liabilities assumed, based upon their estimated fair values at the date of the acquisition, as well as goodwill of $8.8 million and definite-lived intangible assets of $10.8 million. The Company expects $19.6 million of the purchase price to be tax deductible over 15 years. The transaction consideration allocation is based upon preliminary information and is subject to change if additional information becomes available. The final fair value of the net assets acquired may result in adjustments to certain assets and liabilities, including goodwill. The revenues and operating income of Stone Harbor were not material to the Company's results of operations for the three and six months ended June 30, 2022.

Transaction consideration consisted of $28.2 million in cash paid at closing and $1.2 million in contingent consideration recorded at fair value, which represents future potential earn-out payments based on pre-established performance metrics related to revenue retention and revenue growth rates. Future contingent consideration will be paid, if earned, in 2023, 2026 and 2027. The contingent consideration has been accounted for as a liability within contingent consideration on the Company's Condensed Consolidated Balance Sheet.

The following table summarizes the identified acquired assets and liabilities assumed as of the Stone Harbor acquisition date:


	January 1, 2022
	(in thousands)
Assets:
Cash and cash equivalents	$	8,443
Intangible assets	10,800
Goodwill	8,846
Other assets	55,129
Total Assets	83,218
Liabilities
Accounts payable and accrued liabilities	53,802
Total liabilities	53,802
Total Net Assets Acquired	$	29,416

Identifiable Intangible Assets Acquired

The Company identified and recorded the following intangible assets as a result of the Stone Harbor acquisition:


	January 1, 2022
	Approximate Fair Value (in thousands)		Weighted Average of Useful Life (in years)
Definite-lived intangible assets:
Investment management agreements	$	6,000	7.3
Trade names	1,000		6.0
Software	3,800		4.0
Total definite-lived intangible assets	$	10,800

The fair value of investment management agreements was estimated using a discounted cash flow method, the fair value of the trade names was estimated using a royalty savings method, and the fair value of the software was estimated using a royalty savings method and replacement cost approach. The Stone Harbor fair value estimates were prepared with the assistance of an independent valuation firm.

Westchester Capital Management

On October 1, 2021, the Company completed the acquisition of Westchester Capital Management, LLC ("Westchester"), which was accounted for in accordance with ASC 805. The total transaction consideration of $169.3 million

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was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition. Goodwill of $23.0 million and intangible assets of $144.4 million were recorded as a result of the acquisition. The Company expects $155.6 million of the purchase price to be tax deductible over 15 years. The revenues and operating income of Westchester were not material to the Company's results of operations for the three and six months ended June 30, 2022.

Transaction consideration consisted of $156.8 million in cash and contingent consideration accounted for as a liability on the Company's Condensed Consolidated Balance sheet, which represents future potential earn-out payments based on pre-established performance metrics related to revenue growth rates. Future contingent consideration payments will be made, if earned, in 2025 and 2026. As of June 30, 2022, the contingent consideration balance was $15.4 million.

Fund Adoption and NFJ Investment Group

On February 1, 2021, the Company ~~completed the actions necessary to finalize its strategic partnership~~finalized an agreement with Allianz Global Investors U.S. LLC ("~~AllianzGI"~~AGI"), pursuant to which the Company became the investment adviser, distributor and/or administrator of certain of ~~AllianzGI's~~AGI's open-end, closed-end and retail separate account assets. This transaction was classified as an asset acquisition and the cost of the acquisition was allocated to the assets acquired on the basis of their relative fair values. Additionally, as part of the ~~strategic partnership, AllianzGI’s~~transaction, AGI’s Dallas-based Value Equity team joined the Company as a newly established affiliated manager, NFJ Investment Group ("NFJ"). The addition of NFJ was classified as a business combination under ASC 805 and assets acquired were recorded at fair value. Assets acquired ~~in connection with the transaction~~ primarily consisted of definite-lived intangible assets representing ~~open-end, closed-end and retail separate account~~ investment contracts as well as indefinite-lived assets consisting of goodwill related to NFJ. The revenues and operating income of NFJ were not material to the Company's results of operations for the three and six months ended June 30, 2022 or 2021.

Transaction consideration consists of variable cash payments based on a percentage of the investment management fees earned on certain open-end, closed-end and retail separate account assets ~~adopted under~~from the transaction. Payments are to be made annually ~~around~~on the anniversary of the closing date of the ~~transaction~~transactions over ~~the next~~ seven years. ~~The~~Contingent payment obligations related to the NFJ acquisition, which were accounted for in accordance with ASC 805 are remeasured at fair value as of each reporting period-end, with the change in fair value recorded within the Condensed Consolidated Statement of Operations. An estimate of these future ~~revenue participation~~ payments ~~of $137.7 million at June 30, 2021 have~~has been recorded as a liability and included as ~~Contingent Consideration~~contingent consideration on the Company's Condensed Consolidated Balance Sheet. ~~In addition,~~A payment of $33.0 million was made in the ~~Company capitalized $7.7 million~~first quarter of ~~costs associated with certain assets acquired.~~2022. The estimated value of future revenue participation payments at June 30, 2022 was $117.0 million.

~~The following table summarizes the identified acquired assets:~~

5. Goodwill and Intangible Assets, Net

Activity in goodwill was as follows:

~~February 1, 2021~~

(in thousands)

~~Approximate Fair Value~~Balance at December 31, 2021

~~Weighted Average Useful Life~~$

338,406

~~Definite-lived intangible assets:~~Acquisitions

9,017

~~Open-end and closed-end fund investment contracts~~Balance at June 30, 2022

~~101,447~~

~~13 years~~

~~Retail separate account investment contracts~~

~~17,000~~

~~6 years~~

~~Trade name~~

~~1,941~~

~~8 years~~

~~Total definite-lived intangible assets~~

~~120,388~~347,423

~~Goodwill~~

~~25,000~~

~~Total assets acquired~~

~~145,388~~

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~~5. Intangible Assets, Net~~

Below is a summary of intangible assets, net:

(in thousands) June 30, 2021 December 31, 2020
Definite-lived intangible assets:
Investment contracts and other $ 609,958 $ 489,570
Accumulated amortization (272,650) (252,822)
Definite-lived intangible assets, net 337,308 236,748
Indefinite-lived intangible assets 43,516 43,516
Total intangible assets, net $ 380,824 $ 280,264

~~Activity in intangible assets, net was as follows:~~

Six Months Ended June 30,
(in thousands) 2021 2020
Intangible assets, net
Balance, beginning of period $ 280,264 $ 310,391
Additions 120,388 0
Amortization (19,828) (15,066)
Balance, end of period $ 380,824 $ 295,325


	Definite-Lived						Indefinite-Lived		Total
(in thousands)	Gross Book Value		Accumulated Amortization		Net Book Value		Net Book Value		Net Book Value
Balances at December 31, 2021	$	755,576	$	(297,303)	$	458,273	$	42,298	$	500,571
Additions	10,800		—		10,800		—		10,800
Intangible amortization	—		(29,286)		(29,286)		—		(29,286)
Balances at June 30, 2022	$	766,376	$	(326,589)	$	439,787	$	42,298	$	482,085

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Definite-lived intangible asset amortization for the remainder of fiscal year ~~2021~~2022 and succeeding fiscal years is estimated as follows:


Fiscal Year	Fiscal Year	Amount (in thousands)		Fiscal Year	Amount (in thousands)
Remainder of 2021		20,782
2022		41,440
Remainder of 2022				Remainder of 2022	$	29,218
2023	2023	40,778		2023	57,835
2024	2024	35,136		2024	52,194
2025	2025	30,368		2025	47,426
2026 and thereafter		168,804
2026				2026	46,446
2027 and thereafter				2027 and thereafter	206,668
Total	Total	$	337,308	Total	$	439,787

6. Investments

Investments consist primarily of investments in the Company's sponsored products. The Company's investments, excluding the assets of consolidated investment products ("CIP") discussed in Note 16, at June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:

(in thousands) June 30, 2021 December 31, 2020
Investment securities - fair value $ 54,448 $ 39,990
Equity method investments (1) 13,193 12,676
Nonqualified retirement plan assets 12,132 10,612
Other investments 2,002 1,666
Total investments $ 81,775 $ 64,944


(in thousands)	June 30, 2022		December 31, 2021
Investment securities - fair value	$	77,184	$	80,335

Equity method investments (1)	11,968		13,038
Nonqualified retirement plan assets	11,546		13,321
Other investments	2,142		2,196
Total investments	$	102,840	$	108,890

(1) The Company's equity method investments are valued on a three-month lag based upon the availability of financial information.

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Investment Securities - fair value

Investment securities - fair value consist of investments in the Company's sponsored funds and separately managed ~~accounts and trading debt securities.~~accounts. The composition of the Company’s investment securities - fair value was as follows:


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
(in thousands)	(in thousands)	Cost		Fair Value		Cost		Fair Value		(in thousands)	Cost		Fair Value		Cost		Fair Value
Investment Securities - fair value	Investment Securities - fair value									Investment Securities - fair value
Sponsored funds	Sponsored funds	$	40,304	$	40,791	$	22,378	$	25,909	Sponsored funds	$	71,808	$	65,121	$	63,090	$	66,326
Equity securities	Equity securities	10,123		13,642		9,614		14,078		Equity securities	11,702		12,063		10,659		14,009
Debt securities		7		15		7		3

Total investment securities - fair value	Total investment securities - fair value	$	50,434	$	54,448	$	31,999	$	39,990	Total investment securities - fair value	$	83,510	$	77,184	$	73,749	$	80,335

For the three and six months ended June 30, 2022, the Company recognized net realized losses of $0.1 million and $30 thousand, respectively, on the sale of its investment securities - fair value. For the three and six months ended June 30, 2021, the Company recognized net realized gains of $1.0 million and $1.8 million, respectively, on the sale of its investment securities - fair value, respectively. For the three and six months ended June 30, 2020, the Company recognized realized gains of less than $0.1 million and realized losses of $0.3 million on the sale of its investment securities - fair value, respectively.value.

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7. Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 16, as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 by fair value hierarchy level were as follows:

June 30, ~~2021~~2022


(in thousands)	(in thousands)	Level 1		Level 2		Level 3		Total		(in thousands)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	208,764	$	0	$	0	$	208,764	Cash equivalents	$	180,574	$	—	$	—	$	180,574
Investment securities - fair value	Investment securities - fair value									Investment securities - fair value
Sponsored funds	Sponsored funds	40,791		0		0		40,791		Sponsored funds	65,121		—		—		65,121
Equity securities	Equity securities	13,642		0		0		13,642		Equity securities	12,063		—		—		12,063
Debt securities		0		15		0		15

Nonqualified retirement plan assets	Nonqualified retirement plan assets	12,132		0		0		12,132		Nonqualified retirement plan assets	11,546		—		—		11,546
Total assets measured at fair value	Total assets measured at fair value	$	275,329	$	15	$	0	$	275,344	Total assets measured at fair value	$	269,304	$	—	$	—	$	269,304

Liabilities										Liabilities
Contingent consideration										Contingent consideration	$	—	$	—	$	72,980	$	72,980
Total liabilities measured at fair value										Total liabilities measured at fair value	$	—	$	—	$	72,980	$	72,980

December 31, ~~2020~~2021


(in thousands)	(in thousands)	Level 1		Level 2		Level 3		Total		(in thousands)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	207,101	$	0	$	0	$	207,101	Cash equivalents	$	307,277	$	—	$	—	$	307,277
Investment securities - fair value	Investment securities - fair value									Investment securities - fair value
Sponsored funds	Sponsored funds	25,909		0		0		25,909		Sponsored funds	66,326		—		—		66,326
Equity securities	Equity securities	14,078		0		0		14,078		Equity securities	14,009		—		—		14,009
Debt securities		0		3		0		3

Nonqualified retirement plan assets	Nonqualified retirement plan assets	10,612		0		0		10,612		Nonqualified retirement plan assets	13,321		—		—		13,321
Total assets measured at fair value	Total assets measured at fair value	$	257,700	$	3	$	0	$	257,703	Total assets measured at fair value	$	400,933	$	—	$	—	$	400,933

Liabilities										Liabilities
Contingent consideration										Contingent consideration	$	—	$	—	$	88,400	$	88,400
Total liabilities measured at fair value										Total liabilities measured at fair value	$	—	$	—	$	88,400	$	88,400

The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value:

Cash equivalents represent investments in money market funds. Cash investments in money market funds are valued using published net asset values and are classified as Level 1.

Sponsored funds represent investments in open-end funds, closed-end funds and ETFs for which the Company acts as the investment manager. The fair value of open-end funds is determined based on their published net asset values and are

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categorized as Level 1. The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded and are categorized as Level 1.

Equity securities represent securities traded on active markets, ~~and~~ are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

~~Debt securities~~ ~~represent investments in senior secured bank loans and are based on evaluated quotations received from independent pricing services and are categorized as Level 2.~~

Nonqualified retirement plan assets represent mutual funds within athe Company's nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Contingent consideration represents liabilities associated with the Company's business combinations. See Note 4 for a discussion of the transactions. The estimated fair values are measured using a simulation model using unobservable market data inputs prepared with the assistance of an independent valuation firm. These liabilities are categorized as Level 3.

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Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.

The ~~Company had 0~~following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level ~~3 investments for the three- and six-month periods ended June 30, 2021 and 2020, respectively.~~3:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Contingent consideration, beginning of period	$	70,080	$	63,500	$	88,400	$	—
Additions for acquisition	—		—		1,200		63,500
Reduction for payments made	—		—		(19,520)		—
Increase (reduction) of liability related to re-measurement of fair value	2,900		—		2,900		—
Contingent consideration, end of period	$	72,980	$	63,500	$	72,980	$	63,500

8. Equity Transactions

Dividends Declared

On May ~~13, 2021,~~18, 2022, the Company declared a quarterly cash dividend of ~~$0.82~~$1.50 per common share to be paid on August ~~13, 2021~~15, 2022 to stockholders of record at the close of business on July ~~30, 2021.~~29, 2022.

Common Stock Repurchases

During the three and six months ended June 30, ~~2021,~~2022, the Company repurchased ~~26,921~~221,903 and ~~46,833~~347,355 common shares, respectively, at a weighted average price of ~~$278.56~~$180.23 and ~~$266.87~~$201.49 per share, respectively, for a total cost, including fees and expenses, of ~~$7.5~~$40.0 million and ~~$12.5~~$70.0 million, respectively, under its share repurchase program. In May 2022, the Company's Board of Directors authorized an additional 750,000 shares to be repurchased under the share repurchase program. As of June 30, ~~2021, 675,809~~2022, 932,094 shares remained available for repurchase. Under the terms of the program, the Company may repurchase shares of its common stock from time to time at its discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions. The program, which has no specified term, may be suspended or terminated at any time.

9. Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows:


	Foreign Currency Translation Adjustments (in thousands)
Balance at December 31, 2021	$	20
Net current-period other comprehensive income (loss) (1)	(287)
Balance at June 30, 2022	$	(267)

	Foreign Currency Translation Adjustments (in thousands)
Balance at December 31, 2020	$	29

~~Foreign currency translation adjustments, net of tax of $(2)~~	6

Net current-period other comprehensive income (loss) (1)	6
Balance at June 30, 2021	$	35

~~Table~~(1) Consists of ~~Contents~~


~~(in thousands)~~	Foreign Currency Translation Adjustments
~~Balance at December 31, 2019~~	$	9

~~Foreign currency translation adjustments, net of tax of $9~~	~~(26)~~

~~Net current-period other comprehensive income (loss)~~	~~(26)~~
~~Balance at June 30, 2020~~	$	~~(17)~~

foreign currency translation adjustments, net of tax of $249 and $(2) for the six months ended June 30, 2022 and 2021, respectively.

10. Stock-Based Compensation

Pursuant to the Company's Omnibus Incentive and Equity Plan (the ~~"Plan"~~"Omnibus Plan"), officers, employees and directors may be granted equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"),

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stock options and unrestricted shares of common stock. At June 30, ~~2021, 814,812~~2022, 668,628 shares of common stock ~~remained~~remain available for issuance of the 3,370,000 shares that are authorized for issuance under the Omnibus Plan.

Stock-based compensation expense is summarized as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)									(in thousands)	2022		2021		2022		2021
Stock-based compensation expense	Stock-based compensation expense	$	7,849	$	6,492	$	15,844	$	10,113	Stock-based compensation expense	$	4,572	$	7,849	$	14,119	$	15,844

Restricted Stock Units

Each RSU entitles the holder to ~~one~~1 share of common stock when the restriction expires. RSUs may be time-vested or performance-contingent (PSUs) that convert into RSUs after performance measurement is complete and generally vest in one to three years. Shares that are issued upon vesting are newly issued shares from the Omnibus Plan and are not issued from treasury stock.

RSU activity, inclusive of PSUs, for the six months ended June 30, ~~2021~~2022 is summarized as follows:


		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020		533,185	$	106.19
Outstanding at December 31, 2021					Outstanding at December 31, 2021	430,730	$	138.01
Granted	Granted	96,378	$	263.58	Granted	175,379	$	193.35
Forfeited	Forfeited	(20,851)	$	129.78	Forfeited	(36,336)	$	116.73
Settled	Settled	(183,473)	$	123.13	Settled	(183,995)	$	119.53
Outstanding at June 30, 2021		425,239	$	133.39
Outstanding at June 30, 2022					Outstanding at June 30, 2022	385,778	$	173.99

For the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, a total of ~~72,324~~72,043 and ~~62,899~~72,324 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations. The Company paid ~~$19.3~~$15.3 million and ~~$5.5~~$19.3 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, in minimum employee tax withholding obligations related to RSUs withheld for the net share settlements. These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting.

During the six months ended June 30, ~~2021,~~2022, the Company granted ~~24,798~~30,516 PSUs that contain performance-based metrics in addition to a service condition. Compensation expense for PSUs is generally recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value method, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718, and (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718. Compensation expense for PSU awards that contain a market condition is fixed at the date of grant and will not be adjusted in future periods based upon the achievement of the market condition. Compensation expense for PSU awards with a performance condition is recorded each period based upon a probability assessment of the expected outcome of the performance metric with a final adjustment upon measurement at the end of the performance period.

As of June 30, ~~2021,~~2022, unamortized stock-based compensation expense for unvested RSUs and PSUs was ~~$33.2~~$35.2 million

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with a weighted-average remaining contractual life of 1.4 years.

11. Earnings (Loss) Per Share

Earnings (loss) per share ("EPS") is calculated in accordance with ASC 260, Earnings per Share.Basic EPS is computed by dividing net income (loss) attributable to Virtus Investment Partners, Inc. by the weighted-average number of common shares outstanding for the period, excluding dilution for potential common stock issuances. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, ~~including: (i)~~including shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method, ~~and (ii) shares issuable upon the conversion of the Company's previously outstanding mandatory convertible preferred stock ("MCPS"),~~ as determined under the if-converted method. ~~For purposes~~

Table of ~~calculating diluted EPS, preferred stock dividends have been subtracted from net income (loss) in periods in which utilizing the if-converted method would be anti-dilutive.~~Contents

The computation of basic and diluted EPS is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	(in thousands, except per share amounts)	2021		2020		2021		2020		(in thousands, except per share amounts)	2022		2021		2022		2021
Net Income (Loss)	Net Income (Loss)	$	76,097	$	16,209	$	128,311	$	17,215	Net Income (Loss)	$	14,259	$	76,097	$	53,378	$	128,311
Noncontrolling interests	Noncontrolling interests	(13,130)		(4,930)		(28,756)		(10,221)		Noncontrolling interests	3,143		(13,130)		(2,917)		(28,756)

Net Income (Loss) Attributable to Virtus Investment Partners, Inc.	Net Income (Loss) Attributable to Virtus Investment Partners, Inc.	$	62,967	$	11,279	$	99,555	$	6,994	Net Income (Loss) Attributable to Virtus Investment Partners, Inc.	$	17,402	$	62,967	$	50,461	$	99,555
Shares:
Shares (in thousands):										Shares (in thousands):
Basic: Weighted-average number of shares outstanding	Basic: Weighted-average number of shares outstanding	7,698		7,720		7,674		7,572		Basic: Weighted-average number of shares outstanding	7,449		7,698		7,496		7,674
Plus: Incremental shares from assumed conversion of dilutive instruments	Plus: Incremental shares from assumed conversion of dilutive instruments	309		175		364		364		Plus: Incremental shares from assumed conversion of dilutive instruments	158		309		225		364
Diluted: Weighted-average number of shares outstanding	Diluted: Weighted-average number of shares outstanding	8,007		7,895		8,038		7,936		Diluted: Weighted-average number of shares outstanding	7,607		8,007		7,721		8,038
Earnings (Loss) per Share—Basic	Earnings (Loss) per Share—Basic	$	8.18	$	1.46	$	12.97	$	0.92	Earnings (Loss) per Share—Basic	$	2.34	$	8.18	$	6.73	$	12.97
Earnings (Loss) per Share—Diluted	Earnings (Loss) per Share—Diluted	$	7.86	$	1.43	$	12.39	$	0.88	Earnings (Loss) per Share—Diluted	$	2.29	$	7.86	$	6.54	$	12.39

The following table details the securities that have been excluded from the above computation of weighted-average number of shares for diluted EPS, because the effect would be anti-dilutive.


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended June 30,		Six Months Ended June 30,
(in thousands)	(in thousands)	2021	2020	2021	2020	(in thousands)	2022	2021	2022	2021
Restricted stock units and options		5	35	6	1
Restricted stock units						Restricted stock units	84	5	24	6

Total anti-dilutive securities	Total anti-dilutive securities	5	35	6	1	Total anti-dilutive securities	84	5	24	6

12. Income Taxes

In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances at each interim period. On a quarterly basis, the estimated annual effective tax rate is adjusted, as appropriate, based upon changes in facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and at each interim period thereafter.

The provision for income taxes reflected U.S. federal, state and local taxes at an estimated effective tax rate of ~~22.6%~~38.4% and ~~50.9%~~22.6% for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~comparatively lower~~higher estimated effective tax rate for the six months ended June 30, ~~2021~~2022 was primarily due to valuation allowances recorded in the ~~prior~~current year ~~period~~ for the tax effects of unrealized losses on certain Company investments.

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13. Debt

C~~redit~~Credit Agreement

The Company's credit agreement, as amended (the "Credit Agreement"), ~~is comprised of~~comprises (i) ~~$365.0~~a $275.0 million of seven-year term ~~debt~~loan (the "Term Loan") expiring in ~~June 2024~~September 2028, and (ii) a ~~$100.0~~$175.0 million ~~five-year~~ revolving credit facility ~~(the "Credit Facility")~~with a five-year term expiring in ~~June 2022.~~September 2026. During the six months ended June 30, ~~2021,~~2022, the Company repaid ~~$11.8~~$11.4 million outstanding under its Term Loan. At June 30, ~~2021, $193.8~~2022, $262.9 million ~~remained~~was outstanding under the Term Loan, and the Company had 0no outstanding borrowings under its ~~Credit Facility.~~revolving credit facility. In accordance with ASC 835, Interest, the amounts outstanding under the Company's Term Loan are presented onin the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were ~~$3.6~~$7.1 million as of June 30, ~~2021.~~2022.

14. Commitments and Contingencies

Legal Matters

The Company is involved from time to time in litigation and arbitration, as well as examinations, inquiries and investigations by various regulatory bodies, including the SEC, involving its compliance with, among other things, securities laws, client investment guidelines, laws governing the activities of broker-dealers and other laws and regulations affecting its products and other activities. Legal and regulatory matters of this nature involve or may involve but are not limited to the

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Company's activities as an employer, issuer of securities, investor, investment adviser, broker-dealer or taxpayer. In addition, in the normal course of business, the Company discusses matters with its regulators raised during regulatory examinations or is otherwise subject to their inquiry. These matters could result in censures, fines, penalties or other sanctions.

The Company records a liability when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosures related to such matter as appropriate and in compliance with ASC 450, Contingencies. The disclosures, accruals or estimates, if any, resulting from the foregoing analysis are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. Based on information currently available, available insurance coverage, indemnities and established reserves, the Company believes that the outcomes of its legal and regulatory proceedings are not likely, either individually or in the aggregate, to have a material adverse effect on the Company's results of operations, cash flows or its consolidated financial condition. However, in the event of unexpected subsequent developments, and given the inherent unpredictability of these legal and regulatory matters, the Company can provide no assurance that its assessment of any claim, dispute, regulatory examination or investigation or other legal matter will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods.

15. Redeemable Noncontrolling Interests

Redeemable noncontrolling interests represent third-party investments in the Company's CIP and minority interests held in a consolidated ~~majority-owned~~ affiliate. Minority interests held in the affiliate are subject to holder put rights and Company call rights at established multiples of earnings before interest, taxes, depreciation and amortization and, as such, are considered redeemable at other than fair value. The rights are exercisable at pre-established intervals (between four and seven years from their issuance) or upon certain conditions, such as retirement. The put and call rights are not legally detachable or separately exercisable and are deemed to be embedded in the related noncontrolling interests. The Company, in purchasing affiliate equity, has the option to settle in cash or shares of the Company's common stock and is entitled to the cash flow associated with any purchased equity. Minority interests in an affiliate are recorded at estimated redemption value within redeemable noncontrolling interests inon the Company's Condensed Consolidated Balance Sheets, and any changes in the estimated redemption value are recorded inon the Condensed Consolidated Statements of Operations within noncontrolling interests.

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Redeemable noncontrolling interests for the six months ended June 30, ~~2021~~2022 included the following amounts:


(in thousands)	(in thousands)	CIP		Affiliate Noncontrolling Interests		Total		(in thousands)	CIP		Affiliate Noncontrolling Interests		Total
Balances at December 31, 2020		$	28,061	$	87,452	$	115,513
Balances at December 31, 2021								Balances at December 31, 2021	$	12,416	$	126,549	$	138,965

Net income (loss) attributable to noncontrolling interests	Net income (loss) attributable to noncontrolling interests	918		4,087		5,005		Net income (loss) attributable to noncontrolling interests	(1,593)		4,192		2,599
Changes in redemption value (1)	Changes in redemption value (1)	0		23,406		23,406		Changes in redemption value (1)	—		653		653
Total net income (loss) attributable to noncontrolling interests	Total net income (loss) attributable to noncontrolling interests	918		27,493		28,411		Total net income (loss) attributable to noncontrolling interests	(1,593)		4,845		3,252
Net subscriptions (redemptions) and other	Net subscriptions (redemptions) and other	(6,393)		(6,006)		(12,399)		Net subscriptions (redemptions) and other	2,227		(5,297)		(3,070)

Balances at June 30, 2021		$	22,586	$	108,939	$	131,525
Balances at June 30, 2022								Balances at June 30, 2022	$	13,050	$	126,097	$	139,147

(1) Relates to noncontrolling interests redeemable at other than fair value.

16. Consolidation

The condensed consolidated financial statements include the accounts of the Company, its subsidiaries and investment products that are consolidated. Voting interest entities ("VOEs") are consolidated when the Company is considered to have a controlling financial interest, which is typically present when the Company owns a majority of the voting interest in an entity or otherwise has the power to govern the financial and operating policies of the entity.

The Company evaluates any variable interest entities ("VIEs") in which the Company has a variable interest for consolidation. A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial ~~support~~support; or (ii) where as a group, the holders of the equity investment at risk do not possess (x) the power through voting or similar rights to direct the activities that most significantly impact the ~~entity’s~~ entity's

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economic ~~performance;~~performance, (y) the obligation to absorb expected losses or the right to receive expected residual returns of the ~~entity;~~entity, or (z) proportionate voting and economic interests and where substantially all of the ~~entity’s~~entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights. If an entity has any of these characteristics, it is considered a VIE and is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that has both the power to direct the activities that most significantly impact the ~~VIE’s~~VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

In the normal course of its business, the Company sponsors various investment products, some of which are consolidated by the Company. CIP includes both VOEs, made up primarily of open-end funds in which the Company holds a controlling financial interest, and VIEs, which primarily consist of CLOs of which the Company is considered the primary beneficiary. The consolidation and deconsolidation of these investment products have no impact on net income (loss) attributable to ~~stockholders.~~Virtus Investment Partners, Inc. The ~~Company’s~~Company's risk with respect to these investment products is limited to its beneficial interests in these products. The Company has no right to the benefits from, and does not bear the risks associated with, these investment products beyond the ~~Company’s~~Company's investments in, and fees generated from, these products.

The following table presents the balances of CIP that, after intercompany eliminations, were reflected on the Condensed Consolidated Balance Sheets as of June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


		As of													As of
		June 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
		VOEs		VIEs				VOEs		VIEs					VOEs		VIEs				VOEs		VIEs
(in thousands)	(in thousands)			CLOs		Other				CLOs		Other		(in thousands)			CLOs		Other				CLOs		Other
Cash and cash equivalents	Cash and cash equivalents	$	7,036	$	121,934	$	1,448	$	9,837	$	82,295	$	1,206	Cash and cash equivalents	$	798	$	104,348	$	3,155	$	787	$	205,192	$	1,245
Investments	Investments	54,953		2,154,956		61,934		57,256		2,217,055		58,966		Investments	19,049		1,917,076		54,034		21,544		2,055,107		63,587
Other assets	Other assets	13,962		30,195		889		1,989		10,484		957		Other assets	94		15,920		1,027		64		43,327		819
Notes payable	Notes payable	0		(2,132,012)		0		0		(2,190,445)		0		Notes payable	—		(1,904,444)		—		—		(2,033,617)		—
Securities purchased payable and other liabilities	Securities purchased payable and other liabilities	(20,534)		(101,176)		(634)		(2,566)		(42,940)		(323)		Securities purchased payable and other liabilities	(417)		(65,314)		(159)		(558)		(184,214)		(296)
Noncontrolling interests	Noncontrolling interests	(16,975)		(8,968)		(5,611)		(24,707)		(9,799)		(3,354)		Noncontrolling interests	(4,634)		(6,997)		(8,416)		(4,935)		(8,350)		(7,481)
Net interests in CIP	Net interests in CIP	$	38,442	$	64,929	$	58,026	$	41,809	$	66,650	$	57,452	Net interests in CIP	$	14,890	$	60,589	$	49,641	$	16,902	$	77,445	$	57,874

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Consolidated CLOs

The majority of the Company's CIP that are VIEs are CLOs. At June 30, ~~2021,~~2022, the Company consolidated 6 CLOs. The financial information of certain CLOs is included on the Company's condensed consolidated financial statements on a one-month lag based upon the availability of ~~the fund's~~their financial information. A majority-owned consolidated private fund, whose primary purpose is to invest in CLOs for which the Company serves as the collateral manager, is also included.

Investments of CLOs

The CLOs held investments of ~~$2.2~~$1.9 billion at June 30, ~~2021~~2022 consisting of bank loan investments, which comprise the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries. These bank loan investments mature at various dates between 2022 and 2029 and pay interest at LIBOR plus a spread of up to ~~10.00%~~10.0%. The CLOs may elect to reinvest any prepayments received on bank loan investments up until the periods between October 2019 and ~~March 2025,~~October 2026, depending on the CLO. Generally, subsequent prepayments received after the reinvestment period must be used to pay down the note obligations. At June 30, ~~2021,~~2022, the fair value of the senior bank loans was less than the unpaid principal balance by ~~$35.5~~$113.6 million. At June 30, ~~2021,~~2022, there were no material collateral assets in default.

Notes Payable of CLOs

The CLOs held notes payable with a total value, at par, of ~~$2.3~~$2.2 billion at June 30, ~~2021,~~2022, consisting of senior secured floating rate notes payable with a par value of ~~$2.1~~$1.9 billion and subordinated notes with a par value of ~~$225.9~~$233.7 million. These note obligations bear interest at variable rates based on LIBOR plus a pre-defined spread ranging from 0.8% to ~~8.7%~~8.9%. The principal amounts outstanding of these note obligations mature on dates ranging from October 2027 to ~~January 2033.~~October 2034.

The ~~Company’s~~Company's beneficial interests and maximum exposure to loss related to these consolidated CLOs is limited to (i) ownership in the subordinated notes and (ii) accrued management fees. The secured notes of the consolidated CLOs have contractual recourse only to the related assets of the CLO and are classified as financial liabilities. Although these beneficial

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interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13, Consolidation (Topic 810) ("("ASU 2014-13"), results in the net assets of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at June 30, ~~2021,~~2022, as shown in the table below:





	(in thousands)
Subordinated notes	$	~~63,664~~59,446
Accrued investment management fees	~~1,265~~1,143
Total ~~beneficial interests~~Beneficial Interests	$	~~64,929~~60,589

The following table represents income and expenses of the consolidated CLOs included on the Company’s Condensed Consolidated Statements of Operations for the period indicated:


~~(in thousands)~~	Six Months Ended June 30, ~~2021~~2022
	(in thousands)
Income:
Realized and unrealized gain (loss), net	$	~~(4,646)~~(21,668)
Interest income	~~44,487~~40,633

Total ~~income~~Income	~~39,841~~18,965

Expenses:
Other operating expenses	~~904~~1,126
Interest expense	~~28,901~~26,504
Total ~~expense~~Expense	~~29,805~~27,630
Noncontrolling interests	~~(345)~~335
Net Income ~~(loss) attributable~~(Loss) Attributable to CIP	$	~~9,691~~(8,330)

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As summarized in the table below, the application of the measurement alternative as prescribed by ASU 2014-13 results in the consolidated net income summarized above to be equivalent to the Company’s own economic interests in the consolidated CLOs, which are eliminated upon consolidation:


~~(in thousands)~~	Six Months Ended June 30, ~~2021~~2022
	(in thousands)
Distributions received and unrealized gains (losses) on the subordinated notes held by the Company	$	~~5,054~~ (12,458)
Investment management fees	~~4,637~~4,128

Total ~~economic interests~~Economic Interests	$	~~9,691~~(8,330)

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Fair Value Measurements of CIP

The assets and liabilities of CIP measured at fair value on a recurring basis as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 by fair value hierarchy level were as follows:

As of June 30, ~~2021~~2022


(in thousands)	(in thousands)	Level 1		Level 2		Level 3		Total		(in thousands)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	121,934	$	0	$	0	$	121,934	Cash equivalents	$	104,348	$	—	$	—	$	104,348
Debt investments	Debt investments	1,281		2,194,503		50,186		2,245,970		Debt investments	197		1,932,308		30,396		1,962,901
Equity investments	Equity investments	21,907		2,071		1,895		25,873		Equity investments	22,767		3,130		1,361		27,258

Total assets measured at fair value	Total assets measured at fair value	$	145,122	$	2,196,574	$	52,081	$	2,393,777	Total assets measured at fair value	$	127,312	$	1,935,438	$	31,757	$	2,094,507
Liabilities	Liabilities									Liabilities
Notes payable	Notes payable	$	0	$	2,132,012	$	0	$	2,132,012	Notes payable	$	—	$	1,904,444	$	—	$	1,904,444

Short sales	Short sales	531		0		0		531		Short sales	345		—		—		345
Total liabilities measured at fair value	Total liabilities measured at fair value	$	531	$	2,132,012	$	0	$	2,132,543	Total liabilities measured at fair value	$	345	$	1,904,444	$	—	$	1,904,789

As of December 31, ~~2020~~2021


(in thousands)	(in thousands)	Level 1		Level 2		Level 3		Total		(in thousands)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	82,295	$	0	$	0	$	82,295	Cash equivalents	$	205,192	$	—	$	—	$	205,192
Debt investments	Debt investments	16,859		2,219,199		53,368		2,289,426		Debt investments	273		2,107,736		2,695		2,110,704
Equity investments	Equity investments	38,468		3,856		814		43,138		Equity investments	26,111		2,961		462		29,534
Derivatives		858		1,227		0		2,085

Total assets measured at fair value	Total assets measured at fair value	$	138,480	$	2,224,282	$	54,182	$	2,416,944	Total assets measured at fair value	$	231,576	$	2,110,697	$	3,157	$	2,345,430
Liabilities	Liabilities									Liabilities
Notes payable	Notes payable	$	0	$	2,190,445	$	0	$	2,190,445	Notes payable	$	—	$	2,033,617	$	—	$	2,033,617
Derivatives		714		757		0		1,471

Short sales	Short sales	520		0		0		520		Short sales	515		—		—		515
Total liabilities measured at fair value	Total liabilities measured at fair value	$	1,234	$	2,191,202	$	0	$	2,192,436	Total liabilities measured at fair value	$	515	$	2,033,617	$	—	$	2,034,132

The following is a discussion of the valuation methodologies used for the assets and liabilities of the Company’s CIP measured at fair value:

Cash equivalents represent investments in money market funds. Cash investments in money market funds are valued using published net asset values and are classified as Level 1.

Debt and equity investments represent the underlying debt, equity and other securities held in CIP. Equity investments are valued at the official closing price on the exchange on which the securities are traded and are generally categorized within Level 1. Level 2 investments represent most debt securities, including bank loans and certain equity securities (including ~~non-~~

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~~U.S.~~non-U.S. securities), for which closing prices are not readily available or are deemed to not reflect readily available market prices, and are valued using an independent pricing service. Debt investments are valued based on quotations received from independent pricing services or from dealers who make markets in such securities. Bank loan investments, which are included as debt investments, are generally priced at the average mid-point of bid and ask quotations obtained from a third-party pricing service. Fair value may also be based upon valuations obtained from independent third-party brokers or dealers utilizing matrix pricing models that consider information regarding securities with similar characteristics. In certain instances, fair value has been determined utilizing discounted cash flow analyses or single broker non-binding quotes. Depending on the nature of the inputs, these assets are classified as Level 1, 2 or 3 within the fair value measurement hierarchy. Level 3 investments include debt and equity securities that are not widely traded, are illiquid or are priced by dealers based on pricing models used by market makers in the security.

Derivative assets and liabilities represent futures contracts, swaps contracts, option contracts and forward contracts held in CIP. Derivative instruments in an asset position are classified as other assets of CIP on the Condensed Consolidated Balance Sheets. Derivative instruments in a liability position are classified as liabilities of CIP within the Condensed Consolidated Balance Sheets. The change in fair value of such derivatives is recorded in realized and unrealized gain (loss) on investments of CIP, net, on the Condensed Consolidated Statements of Operations. Depending on the nature of the inputs, these derivative assets and liabilities are classified as Level 1, 2 or 3 within the fair value measurement hierarchy. In connection with entering into these derivative contracts, these CIP may be required to pledge an amount of cash equal to the appropriate "initial margin" requirements. The cash pledged or on deposit is recorded on the Condensed Consolidated Balance Sheets of the Company as Cash pledged or on deposit of CIP. The fair value of such derivatives at December 31, 2020, was immaterial. There were 0 derivative assets or liabilities held at June 30, 2021.

Notes payable represent notes issued by CIP CLOs and are measured using the measurement alternative in ASU 2014-13. Accordingly, the fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (i) the fair value of the beneficial interests held by the Company and (ii) the carrying value of any beneficial interests that represent

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compensation for services. The fair value of the beneficial interests held by the Company is based on third-party pricing information without adjustment.

Short sales are transactions in which a security is sold that is not owned or is owned but there is no intention to deliver, in anticipation that the price of the security will decline. Short sales are recorded on the Condensed Consolidated Balance Sheets within other liabilities of CIP and are classified as Level 1 based on the underlying equity security.

The securities purchase payable at June 30, ~~2021~~2022 and December 31, ~~2020~~2021 approximated fair value due to the short-term nature of the instruments.

The following table is a reconciliation of assets of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value:


		Six Months Ended June 30,					Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Balance at beginning of period	Balance at beginning of period	$	54,182	$	40,422	Balance at beginning of period	$	3,157	$	54,182
Realized gains (losses), net	Realized gains (losses), net	(214)		4		Realized gains (losses), net	27		(214)
Change in unrealized gains (losses), net	Change in unrealized gains (losses), net	3,281		(920)		Change in unrealized gains (losses), net	(930)		3,281

Purchases	Purchases	4,395		56		Purchases	—		4,395

Amortization	Amortization	60		6		Amortization	(9)		60
Sales	Sales	(27,309)		(1,195)		Sales	(2,135)		(27,309)
Transfers to Level 2	Transfers to Level 2	(44,578)		(38,607)		Transfers to Level 2	(36,833)		(44,578)
Transfers from Level 2	Transfers from Level 2	62,264		12,106		Transfers from Level 2	68,480		62,264
Balance at end of period (1)	Balance at end of period (1)	$	52,081	$	11,872	Balance at end of period (1)	$	31,757	$	52,081

(1)The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment. Transfers between Level 2 and Level 3 were due to trading activities at period end.

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Nonconsolidated VIEs

The Company serves as the collateral manager for other collateralized loan and collateralized bond obligations (collectively, "CDOs") that are not consolidated. The assets and liabilities of these CDOs reside in bankruptcy remote, special purpose entities in which the Company has no ownership of, nor holds any notes issued by, the CDOs, and provides neither recourse nor guarantees. The Company has determined that the investment management fees it receives for serving as collateral manager for these CDOs did not represent a variable interest since (i) the fees the Company earns are compensation for services provided and are commensurate with the level of effort required to provide the investment management services, (ii) the Company does not hold other interests in the CDOs that individually, or in the aggregate, would absorb more than an insignificant amount of the CDOs' expected losses or receive more than an insignificant amount of the CDOs' expected residual return, and (iii) the investment management arrangement only includes terms, conditions and amounts that are customarily present in arrangements for similar services negotiated at arm's length.

The Company has interests in certain other VIEs that the Company does not consolidate as it is not the primary beneficiary since its interest in these entities does not provide the Company with the power to direct the activities that most significantly impact the entities' economic performance. At June 30, ~~2021,~~2022, the carrying value and maximum risk of loss related to the Company's interest in these VIEs was ~~$30.8~~$27.8 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains statements that are, or may be considered to be, forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements." These statements may be identified by such forward-looking terminology as "expect," "estimate," "intent," "plan," "intend," "believe," "anticipate," "may," "will," "should," "could," "continue," "project," "opportunity," "predict," "would," "potential," "future," "forecast," "guarantee," "assume," "likely," "target" or similar statements or variations of such terms.

Our forward-looking statements are based on a series of expectations, assumptions and projections about the Company and the markets in which we operate, are not guarantees of future results or performance, and involve substantial risks and uncertainty, including assumptions and projections concerning our assets under management, net asset inflows and outflows, operating cash flows, business plans and ability to borrow, for all future periods. All forward-looking statements contained in this Quarterly Report on Form 10-Q are as of the date of this Quarterly Report on Form 10-Q only.

We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. We do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. If there are any future public statements or disclosures by us that modify or impact any of the forward-looking statements contained in or accompanying this Quarterly Report on Form 10-Q, such statements or disclosures will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.

Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including those discussed under "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our ~~2020~~2021 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, ~~as well as the following risks and uncertainties~~ resulting from:(i) aany reduction in our assets under management; (ii) general domestic and global economic and political conditions (including war, acts of terrorism and civil unrest); (iii) inability to achieve the expected ~~acquisition-related benefits; and other risks and uncertainties; (iii)~~benefits of our strategic transactions; (iv) the ~~on-going~~ongoing effects of the COVID-19 pandemic and associated global economic ~~disruptions; (iv)~~disruption; (v) withdrawal, renegotiation or termination of investment advisory agreements; ~~(v)~~(vi) damage to our reputation; ~~(vi)~~(vii) inability to satisfy financial covenants ~~or make debt payments; (vii)~~and payments related to our indebtedness; (viii) inability to attract and retain key personnel; ~~(viii)~~(ix) challenges from ~~competition; (ix)~~the competition we face in our business; (x) adverse developments related to unaffiliated subadvisers; ~~(x)~~(xi) negative changes in key distribution relationships; ~~(xi)~~(xii) interruptions in or failure to provide critical technological service by us or third parties; ~~(xii) losses~~(xiii) loss on our investments; ~~(xiii)~~(xiv) lack of sufficient capital on satisfactory terms; ~~(xiv)~~(xv) adverse regulatory and legal developments; ~~(xv)~~(xvi) failure to comply with investment guidelines or other contractual requirements; ~~(xvi)~~(xvii) adverse civil litigation and government investigations or proceedings; ~~(xvii)~~(xviii) unfavorable changes in tax laws or limitations; ~~(xviii)~~(xix) volatility ~~in the trading of~~associated with our common stock; ~~(xix)~~(xx) inability to make quarterly common stock ~~dividend payments; (xx)~~dividends; (xxi) certain corporate governance provisions in our charter and bylaws; (xxii) losses or costs not covered by insurance; ~~(xxi)~~(xxiii) impairment of goodwill or intangible assets; and other risks and uncertainties. Any occurrence of, or any material adverse change in, one or more risk factors or risks and uncertainties referred to above, in our ~~2020~~2021 Annual Report on Form 10-K, this Quarterly Report on Form 10-Q and our other periodic reports filed with the Securities and Exchange Commission (the "SEC") could materially and adversely affect our operations, financial results, cash flows, prospects and liquidity.

Certain other factors that may impact our continuing operations, prospects, financial results and liquidity, or that may cause actual results to differ from such forward-looking statements, are discussed or included in the Company’s periodic reports filed with the SEC and are available on our website at www.virtus.com under "Investor Relations." You are urged to carefully consider all such factors.

Overview

Our Business

We provide investment management and related services to individuals and institutions. We use a multi-manager, multi-style approach, offering investment strategies from affiliated managers, each having its own distinct investment style, autonomous investment process and individual ~~brand.~~brand, as well as from select unaffiliated subadvisers. By offering a broad array of products, we believe we can appeal to a greater number of investors and have offerings across market cycles and through changes in investor preferences. Our earnings

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are primarily driven by asset-based fees charged for services relating to these various products, including investment management, fund administration, distribution, and shareholder services.

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We offer investment strategies for individual and institutional investors in different ~~product structures~~investment products and through multiple distribution channels. Our investment strategies are available in a diverse range of styles and disciplines, managed by ~~a collection of~~ differentiated investment managers. We have offerings in various asset classes (equity, fixed income, multi-asset and alternative), geographies (domestic, global, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental, quantitative and ~~thematic)~~specialty). Our retail products include open-end funds, ~~and exchange traded funds ("ETFs") as well as~~ closed-end funds and retail separate accounts. Our institutional products are offered through separate accounts and pooled or commingled structures to a variety of institutional clients. We also provide subadvisory services to other investment advisers and serve as the collateral manager for structured products.

We distribute our open-end funds ~~and ETFs~~ principally through financial intermediaries. We have broad distribution access in the US retail market, with distribution partners that include national and regional broker-dealers, independent broker-dealers and registered investment advisers, banks and insurance companies. In many of these firms, we have a number of products that are on preferred "recommended" lists and on fee-based advisory programs. Our sales efforts are supported by regional sales professionals, a national account relationship group, and separate teams for ETFs and the retirement and insurance channels. ~~We leverage third-party distributors for offshore products and in certain international jurisdictions.~~ Our retail separate accounts are distributed through financial intermediaries and directly to private clients by teams at an affiliated manager.

Our institutional services are marketed through relationships with consultants as well as directly to clients. We target key market segments, including foundations and endowments, corporate, public and private pension plans, and subadvisory relationships.

~~COVID-19 Impact~~

The novel coronavirus global pandemic ("COVID-19") significantly impacted the global economy and financial markets, creating uncertainty, market volatility and dislocation. To contain COVID-19 in the U.S., or slow its spread, the federal government and nearly every state enacted varying degrees of social containment measures, restricting business and related activities, closing borders, and restricting travel. Governments around the world responded to the impact of COVID-19 with economic stimulus measures. Despite the general recovery of the financial markets, particularly domestic equity securities, the timing and magnitude of the economic recovery, as well as the sustainability of the financial markets recovery, continues to be uncertain.

Financial Highlights

▪Net income per diluted share was ~~$7.86~~$2.29 in the second quarter of ~~2021,~~2022, a decrease of $5.57, or 70.9%, as compared to net income per diluted share of ~~$1.43~~$7.86 in the second quarter of ~~2020.~~2021.

▪Total sales were $7.9 billion in the second quarter of 2022, a decrease of $1.7 billion, or 17.4%, from $9.6 billion in the second quarter of ~~2021, an increase of $0.1 billion, or 1.5%, from $9.4~~2021. Net flows were $(4.8) billion in the second quarter of ~~2020. Net flows were $1.3~~2022 compared to $1.5 billion in the second quarter of ~~2021 compared to $2.8 billion in the second quarter of 2020.~~2021.

▪Assets under management were ~~$178.6~~$155.4 billion at June 30, ~~2021, an increase~~2022, a decrease of ~~$70.2~~$23.2 billion, or ~~64.7%~~13.0%, from June 30, ~~2020.~~2021.

~~AllianzGI Strategic Partnership~~Stone Harbor Investment Partners

On January 1, 2022, the Company completed its acquisition of Stone Harbor Investment Partners LLC ("Stone Harbor"), a premier manager of emerging markets debt, multi-asset credit, global corporate, and other strategies with $14.7 billion of assets under management at December 31, 2021.

Westchester Capital Management

On October 1, 2021, the Company completed its acquisition of Westchester Capital Management ("Westchester"), a recognized leader in global event-driven strategies with $5.1 billion of assets under management.

Fund Adoption and NFJ Investment Group

On February 1, 2021, ~~we completed~~ the ~~actions necessary to finalize the strategic partnership~~Company finalized an agreement with Allianz Global Investors U.S. LLC ("~~AllianzGI"~~AGI"), pursuant to which NFJ Investment Group ("NFJ") was established as a new affiliated investment manager, and the Company became the investment adviser, distributor and/or administrator for $29.5 billion of ~~AllianzGI's~~AGI's open-end, closed-end, institutional and retail separate account assets ~~(the "AGI Transaction"~~(together with Westchester and Stone Harbor, the "Transactions"). ~~In addition, the Company had $3.8~~

Assets Under Management

At June 30, 2022, total assets under management were $155.4 billion, representing a decrease of ~~other fee earning assets as of~~$23.2 billion, or 13.0%, from June 30, 2021, ~~also as~~and a ~~result~~decrease of $31.8 billion, or 17.0%, from December 31, 2021. The decrease from June 30, 2021 was due to $33.4 billion of negative market performance and $7.2 billion of net outflows partially offset by an increase of $19.8 billion in assets under management from the ~~AllianzGI partnership.~~addition of Stone Harbor and Westchester. The decrease from December 31, 2021 was due to $39.3 billion in negative market performance and $6.7 billion of net outflows, partially offset by an increase of $14.7 billion in assets under management from the addition of Stone Harbor.

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Other Fee Earning Assets

~~Agreement with Westchester Capital Management~~

~~On February 1, 2021,~~Other fee earning assets include assets for which we ~~entered into~~provide services for an ~~agreement to acquire all of Westchester Capital Management ("Westchester"). The transaction is expected to close~~asset-based fee but do not serve as the investment adviser. Other fee earning assets are not included in the second half of 2021, subject to customary closing conditions and approvals, including by fund shareholders. The expected payment at closing is $135.0 million and there is an additional revenue-retention payment of up to $20.0 million due within six months of closing.

~~Agreement with Stone Harbor Investment Partners~~

On June 25, 2021, we entered into an agreement to acquire Stone Harbor Investment Partners LP ("Stone Harbor"). The transaction is expected to close near the end of 2021, subject to customary closing conditions and approvals, including by fund shareholders.

~~Assets Under Management~~

~~At June 30, 2021, total~~our assets under management were $178.6 billion, representing an increase of $70.2 billion, or 64.7%, from June 30, 2020, and an increase of $46.4 billion, or 35.1%, from December 31, 2020. The increase in total assets under management from June 30, 2020 included $34.0 billion of positive market performance, $29.5 billion from the AGI Transaction and $7.7 billion of positive net flows. The change in total assets under management from December 31, 2020 was due to the increase from the AGI Transaction, $13.5 billion of positive market performance and $3.8 billion of positive net flows. In addition, atmanagement. At June 30, 2021, we had ~~$3.8~~$3.0 billion of other fee earning assets.

Operating Results

In the second quarter of ~~2021,~~2022, total revenues ~~increased 83.6%~~decreased 7.7% to ~~$244.0~~$225.3 million from ~~$132.9~~$244.0 million in the second quarter of ~~2020,~~2021, primarily as a result of ~~higher~~lower average assets under management ~~in our open-end funds as a result of positive~~due to negative market performance ~~positive~~and net ~~flows~~outflows partially offset by an increase in assets under management from Stone Harbor and ~~the assets from the AGI Transaction.~~Westchester. Operating income ~~increased $59.8~~decreased $29.7 million to $56.7 million in the second quarter of 2022 compared to $86.4 million in the second quarter of 2021, ~~compared to $26.6 million in the second quarter of 2020,~~due primarily ~~due~~ to the ~~same factors~~ previously ~~mentioned.~~mentioned factors.

Assets Under Management by Product

The following table summarizes our assets under management by product:


		As of June 30,				Change					As of June 30,				Change
(in millions)	(in millions)	2021		2020		$		%		(in millions)	2022		2021		$		%
Open-End Funds (1) (2)		$	75,333	$	41,144	$	34,189	83.1	%
Open-End Funds (1)										Open-End Funds (1)	$	59,479	$	76,593	$	(17,114)	(22.3)	%
Closed-End Funds	Closed-End Funds	11,993		5,639		6,354		112.7	%	Closed-End Funds	10,645		11,993		(1,348)		(11.2)	%
Exchange Traded Funds		1,260		541		719		132.9	%
Retail Separate Accounts	Retail Separate Accounts	40,578		22,054		18,524		84.0	%	Retail Separate Accounts	35,248		40,578		(5,330)		(13.1)	%
Institutional Accounts (2)	Institutional Accounts (2)	45,604		34,819		10,785		31.0	%	Institutional Accounts (2)	50,048		49,474		574		1.2	%
Structured Products		3,870		4,264		(394)		(9.2)	%

Total	Total	$	178,638	$	108,461	$	70,177	64.7	%	Total	$	155,420	$	178,638	$	(23,218)	(13.0)	%
Average Assets Under Management (3)	Average Assets Under Management (3)	$	163,611	$	102,031	$	61,580	60.4	%	Average Assets Under Management (3)	$	180,743	$	163,611	$	17,132	10.5	%

(1)Represents assets under management of U.S. retail funds, ~~offshore~~global funds, ETFs and variable insurance funds.

(2)~~Includes ultra-short strategies previously included in a~~Represents assets under management of institutional separate ~~liquidity strategy. Prior period amounts have been recast to conform to the current year presentation.~~and commingled accounts including structured products.

(3)Averages ~~for the six-month period ended June 30 were~~are calculated as follows:

–Funds - average daily or weekly balances

–Retail Separate Accounts - prior-quarter ending ~~balances~~balance

–Institutional Accounts ~~and Structured Products~~ - average of month-end balances

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Asset Flows by Product

The following table summarizes asset flows by product:

Three Months Ended
June 30, Six Months Ended
June 30,
(in millions) 2021 2020 2021 2020
Open-End Funds (1) (2)
Beginning balance $ 72,164 $ 34,361 $ 50,771 $ 43,824
Inflows 4,743 4,714 10,596 8,773
Outflows (4,987) (4,115) (10,245) (9,862)
Net flows (244) 599 351 (1,089)
Market performance 3,469 6,255 4,599 (1,478)
Other (3) (56) (71) 19,612 (113)
Ending balance $ 75,333 $ 41,144 $ 75,333 $ 41,144
Closed-End Funds
Beginning balance $ 11,664 $ 5,343 $ 5,914 $ 6,748
Inflows — — — 5
Outflows — — — —
Net flows — — — 5
Market performance 514 380 619 (805)
Other (3) (185) (84) 5,460 (309)
Ending balance $ 11,993 $ 5,639 $ 11,993 $ 5,639
Exchange Traded Funds
Beginning balance $ 1,021 $ 480 $ 837 $ 1,156
Inflows 232 74 407 160
Outflows (92) (140) (169) (373)
Net flows 140 (66) 238 (213)
Market performance 104 137 202 (368)
Other (3) (5) (10) (17) (34)
Ending balance $ 1,260 $ 541 $ 1,260 $ 541
Retail Separate Accounts
Beginning balance $ 37,244 $ 17,660 $ 29,751 $ 20,414
Inflows 2,273 1,483 4,972 2,544
Outflows (833) (654) (1,729) (1,429)
Net flows 1,440 829 3,243 1,115
Market performance 1,910 3,560 4,051 520
Other (3) (16) 5 3,533 5
Ending balance $ 40,578 $ 22,054 $ 40,578 $ 22,054
Institutional Accounts (2)
Beginning balance $ 42,802 $ 28,507 $ 40,861 $ 32,859
Inflows 2,302 3,141 4,186 4,640
Outflows (2,184) (1,667) (4,052) (3,444)
Net flows 118 1,474 134 1,196
Market performance 2,752 4,880 3,933 730
Other (3) (68) (42) 676 34
Ending balance $ 45,604 $ 34,819 $ 45,604 $ 34,819
Structured Products
Beginning balance $ 3,985 $ 4,343 $ 4,060 $ 3,903
Inflows — — — 491
Outflows (118) (73) (197) (115)
Net flows (118) (73) (197) 376
Market performance 33 33 68 72
Other (3)
(30) (39) (61) (87)
Ending balance $ 3,870 $ 4,264 $ 3,870 $ 4,264

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		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2022		2021		2022		2021
Open-End Funds (1)										Open-End Funds (1)
Beginning balance										Beginning balance	$	73,149	$	73,185	$	78,706	$	51,608
Inflows										Inflows	3,120		4,975		8,076		11,003
Outflows										Outflows	(7,643)		(5,079)		(16,021)		(10,414)
Net flows										Net flows	(4,523)		(104)		(7,945)		589
Market performance										Market performance	(9,000)		3,573		(15,907)		4,801
Other (2)										Other (2)	(147)		(61)		4,625		19,595
Ending balance										Ending balance	$	59,479	$	76,593	$	59,479	$	76,593

Closed-End Funds										Closed-End Funds
Beginning balance										Beginning balance	$	12,060	$	11,664	$	12,068	$	5,914
Inflows										Inflows	24		—		32		—
Outflows										Outflows	—		—		—		—
Net flows										Net flows	24		—		32		—
Market performance										Market performance	(1,250)		514		(1,446)		619
Other (2)										Other (2)	(189)		(185)		(9)		5,460
Ending balance										Ending balance	$	10,645	$	11,993	$	10,645	$	11,993

Retail Separate Accounts										Retail Separate Accounts
Beginning balance										Beginning balance	$	40,824	$	37,244	$	44,538	$	29,751
Inflows										Inflows	1,288		2,273		3,310		4,972
Outflows										Outflows	(1,977)		(833)		(3,371)		(1,729)
Net flows										Net flows	(689)		1,440		(61)		3,243
Market performance										Market performance	(4,887)		1,910		(9,229)		4,051
Other (2)										Other (2)	—		(16)		—		3,533
Ending balance										Ending balance	$	35,248	$	40,578	$	35,248	$	40,578

Institutional Accounts (3)										Institutional Accounts (3)
Beginning balance										Beginning balance	$	57,309	$	46,787	$	51,874	$	44,921
Inflows										Inflows	3,452		2,302		5,901		4,186
Outflows										Outflows	(3,032)		(2,184)		(4,655)		(4,052)
Net flows										Net flows	420		118		1,246		134
Market performance										Market performance	(7,657)		2,785		(12,669)		4,001
Other (2)										Other (2)	(24)		(216)		9,597		418
Ending balance										Ending balance	$	50,048	$	49,474	$	50,048	$	49,474

Total	Total									Total
Beginning balance	Beginning balance	$	168,880	$	90,694	$	132,194	$	108,904	Beginning balance	$	183,342	$	168,880	$	187,186	$	132,194
Inflows	Inflows	9,550		9,412		20,161		16,613		Inflows	7,884		9,550		17,319		20,161
Outflows	Outflows	(8,214)		(6,649)		(16,392)		(15,223)		Outflows	(12,652)		(8,096)		(24,047)		(16,195)
Net flows	Net flows	1,336		2,763		3,769		1,390		Net flows	(4,768)		1,454		(6,728)		3,966
Market performance	Market performance	8,782		15,245		13,472		(1,329)		Market performance	(22,794)		8,782		(39,251)		13,472
Other (3)		(360)		(241)		29,203		(504)
Other (2)										Other (2)	(360)		(478)		14,213		29,006
Ending balance	Ending balance	$	178,638	$	108,461	$	178,638	$	108,461	Ending balance	$	155,420	$	178,638	$	155,420	$	178,638

(1)Represents assets under management of U.S. retail funds, ~~offshore~~global funds, ETFs and variable insurance funds.

(2)~~Includes ultra-short strategies previously included in a separate liquidity strategy.~~

~~(3)~~Represents open-end and closed-end fund distributions net of reinvestments, the net change in assets from cash management strategies, and the ~~effect on net flows from~~impact of non-sales related activities such as asset acquisitions/(dispositions), seed capital investments/(withdrawals), current income or capital returned by structured products ~~reset transactions,~~ and the use of leverage.

(3)Represents assets under management of institutional separate and commingled accounts including structured products.

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Assets Under Management by Asset Class

The following table summarizes ~~our~~ assets under management by asset class:


		As of June 30,				Change				% of Total					As of June 30,				Change				% of Total
(in millions)	(in millions)	2021		2020		$		%		2021		2020		(in millions)	2022		2021		$		%		2022		2021
Asset Class	Asset Class													Asset Class
Equity	Equity	$	113,751	$	66,205	$	47,546	71.8	%	63.8	%	61.0	%	Equity	$	84,754	$	113,751	$	(28,997)	(25.5)	%	54.6	%	63.8	%
Fixed income ~~(1)~~	Fixed income ~~(1)~~	35,426		27,427		7,999		29.2	%	19.8	%	25.3	%	Fixed income ~~(1)~~	39,322		35,426		3,896		11.0	%	25.3	%	19.8	%
Multi-asset ~~(2)~~(1)	Multi-asset ~~(2)~~(1)	23,668		10,714		12,954		120.9	%	13.2	%	9.9	%	Multi-asset ~~(2)~~(1)	20,261		23,668		(3,407)		(14.4)	%	13.0	%	13.2	%
Alternatives ~~(3)~~(2)	Alternatives ~~(3)~~(2)	5,793		4,115		1,678		40.8	%	3.2	%	3.8	%	Alternatives ~~(3)~~(2)	11,083		5,793		5,290		91.3	%	7.1	%	3.2	%
Total	Total	$	178,638	$	108,461	$	70,177	64.7	%	100.0	%	100.0	%	Total	$	155,420	$	178,638	$	(23,218)	(13.0)	%	100.0	%	100.0	%

(1)~~Includes ultra-short strategies previously included in a separate liquidity strategy.~~

~~(2)~~Includes strategies with substantial holdings in at least two of the following asset classes: equity, fixed income, and alternatives.

~~(3)Includes~~(2) Consists of event-driven, real estate securities, infrastructure, ~~mid-stream energy,~~ long/short and ~~options~~other strategies.

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Average Assets Under Management and Average ~~Basis Points~~

Fees Earned

The following table summarizes the average management fees earned in basis points and average assets under management:


		Three Months Ended June 30,							Three Months Ended June 30,
		Average Fee Earned (expressed in basis points)		Average Assets Under Management (in millions) (2)					Average Fee Earned (expressed in basis points)		Average Assets Under Management (in millions) (3)
		2021	2020	2021		2020			2022	2021	2022		2021
Products	Products							Products
Open-End Funds (1)	Open-End Funds (1)	46.4	49.5	$	74,126	$	38,182	Open-End Funds (1)	46.2	45.9	$	65,592	$	75,285
Closed-End Funds	Closed-End Funds	55.1	61.8	11,936		5,566		Closed-End Funds	56.9	55.1	11,405		11,936
Exchange Traded Funds		14.0	5.1	1,159		554
Retail Separate Accounts	Retail Separate Accounts	44.2	49.0	37,244		17,660		Retail Separate Accounts	42.9	44.2	40,824		37,244
Institutional Accounts		32.2	31.1	44,538		31,931
Structured Products		40.0	26.8	3,875		4,265
Institutional Accounts (2)								Institutional Accounts (2)	30.6	32.8	53,560		48,413

All Products	All Products	42.5	42.9	$	172,878	$	98,158	All Products	41.2	42.5	$	171,381	$	172,878

		Six Months Ended June 30,							Six Months Ended June 30,
		Average Fee Earned (expressed in basis points)		Average Assets Under Management (in millions) (2)					Average Fee Earned (expressed in basis points)		Average Assets Under Management (in millions) (3)
		2021	2020	2021		2020			2022	2021	2022		2021
Products	Products							Products
Open-End Funds (1)	Open-End Funds (1)	47.2	49.0	$	70,187	$	40,087	Open-End Funds (1)	46.3	46.6	$	70,564	$	71,211
Closed-End Funds	Closed-End Funds	55.6	62.3	10,638		6,045		Closed-End Funds	57.6	55.6	$	11,583	$	10,638
Exchange Traded Funds		10.8	7.3	1,024		758
Retail Separate Accounts	Retail Separate Accounts	44.9	48.9	34,681		19,037		Retail Separate Accounts	43.2	44.9	$	42,681	$	34,681
Institutional Accounts		31.9	30.1	43,151		31,876
Structured Products		39.4	30.3	3,930		4,228
Institutional Accounts (2)								Institutional Accounts (2)	31.1	32.5	$	55,915	$	47,081

All Products	All Products	42.8	42.8	$	163,611	$	102,031	All Products	41.6	42.8	$	180,743	$	163,611

(1)Represents assets under management of U.S. retail funds, ~~offshore~~global funds, ETFs and variable insurance funds.

(2)Represents assets under management of institutional separate and commingled accounts including structured products.

(3)Averages are calculated as follows:

–Funds - average daily or weekly balances

–Retail Separate Accounts - prior-quarter ending ~~balances~~balance

–Institutional Accounts ~~and Structured Products~~ - average of month-end balances

Average fees earned represent investment management fees, ~~before~~net of revenue-related adjustments, divided by average net assets, excluding the impact of consolidation of investment products ("CIP") ~~and are net of revenue related adjustments divided by average net assets. Revenue related~~. Revenue-related adjustments are based on specific agreements and reflect the portion of investment management fees passed-through to third-party client intermediaries for services to investors in sponsored investment products. Fund fees are calculated based on average daily or weekly net

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assets. Retail separate account fees are calculated based on the end of the preceding or current quarter’s asset values or on an average of month-end balances. Institutional account fees are calculated based on an average of month-end balances, oran average of current quarter’s asset ~~values. Structured product fees are calculated based~~values or on a combination of the underlying cash flows and the principal value of the product. Average fees earned will vary based on several factors, including the asset mix and expense reimbursements to the funds.

The average fee rate earned on all products for the three and six months ended June 30, ~~2021~~2022 decreased by ~~0.4~~1.3 basis points and 1.2 basis points, respectively, compared to the same ~~period~~periods in the prior year primarily due to lower fee rates earned on the assets under management acquired from Stone Harbor and a lower proportion of assets under management in equity products as a result of negative equity markets in the ~~AGI Transaction.~~

~~Table of Contents~~

current year periods.

Results of Operations

Summary Financial Data

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2021 2020 2021 vs. 2020 % 2021 2020 2021 vs. 2020 %
Investment management fees $ 193,510 $ 110,550 $ 82,960 75.0 % $ 366,779 $ 230,838 $ 135,941 58.9 %
Other revenue 50,501 22,344 28,157 126.0 % 94,129 46,622 47,507 101.9 %
Total revenues 244,011 132,894 111,117 83.6 % 460,908 277,460 183,448 66.1 %
Total operating expenses 157,600 106,272 51,328 48.3 % 312,355 226,236 86,119 38.1 %
Operating income (loss) 86,411 26,622 59,789 224.6 % 148,553 51,224 97,329 190.0 %
Other income (expense), net 6,067 (435) 6,502 NM 4,042 (16,036) 20,078 NM
Interest income (expense), net 6,020 (2,400) 8,420 NM 13,270 (104) 13,374 NM
Income (loss) before income taxes 98,498 23,787 74,711 314.1 % 165,865 35,084 130,781 372.8 %
Income tax expense (benefit) 22,401 7,578 14,823 195.6 % 37,554 17,869 19,685 110.2 %
Net income (loss) 76,097 16,209 59,888 369.5 % 128,311 17,215 111,096 645.3 %
Noncontrolling interests (13,130) (4,930) (8,200) 166.3 % (28,756) (10,221) (18,535) 181.3 %
Net Income (Loss) Attributable to Virtus Investment Partners, Inc. $ 62,967 $ 11,279 $ 51,688 458.3 % $ 99,555 $ 6,994 $ 92,561 NM

~~NM = Not meaningful~~


	Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	2022		2021		2022 vs. 2021		%		2022		2021		2022 vs. 2021		%
Investment management fees	$	185,024	$	193,510	$	(8,486)	(4.4)	%	$	391,841	$	366,779	$	25,062	6.8	%
Other revenue	40,283		50,501		(10,218)		(20.2)	%	85,906		94,129		(8,223)		(8.7)	%
Total revenues	225,307		244,011		(18,704)		(7.7)	%	477,747		460,908		16,839		3.7	%
Total operating expenses	168,637		157,600		11,037		7.0	%	355,525		312,355		43,170		13.8	%
Operating income (loss)	56,670		86,411		(29,741)		(34.4)	%	122,222		148,553		(26,331)		(17.7)	%
Other income (expense), net	(31,631)		6,067		(37,698)		(621.4)	%	(47,670)		4,042		(51,712)		(1,279.4)	%
Interest income (expense), net	5,700		6,020		(320)		(5.3)	%	12,041		13,270		(1,229)		(9.3)	%
Income (loss) before income taxes	30,739		98,498		(67,759)		(68.8)	%	86,593		165,865		(79,272)		(47.8)	%
Income tax expense (benefit)	16,480		22,401		(5,921)		(26.4)	%	33,215		37,554		(4,339)		(11.6)	%
Net income (loss)	14,259		76,097		(61,838)		(81.3)	%	53,378		128,311		(74,933)		(58.4)	%
Noncontrolling interests	3,143		(13,130)		16,273		(123.9)	%	(2,917)		(28,756)		25,839		(89.9)	%


Net Income (Loss) Attributable to Virtus Investment Partners, Inc.	$	17,402	$	62,967	$	(45,565)	(72.4)	%	$	50,461	$	99,555	$	(49,094)	(49.3)	%
Earnings (loss) per share-diluted	$	2.29	$	7.86	$	(5.57)	(70.9)	%	$	6.54	$	12.39	$	(5.85)	(47.2)	%

Revenues

Revenues by source were as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021 vs. 2020		%		2021		2020		2021 vs. 2020		%		(in thousands)	2022		2021		2022 vs. 2021		%		2022		2021		2022 vs. 2021		%
Investment management fees	Investment management fees																	Investment management fees
Open-end funds	Open-end funds	$	96,795	$	54,018	$	42,777	79.2	%	$	185,667	$	113,126	$	72,541	64.1	%	Open-end funds	$	84,875	$	97,273	$	(12,398)	(12.7)	%	$	182,252	$	186,393	$	(4,141)	(2.2)	%
Closed-end funds	Closed-end funds	16,395		8,557		7,838		91.6	%	29,335		18,736		10,599		56.6	%	Closed-end funds	16,174		16,395		(221)		(1.3)	%	33,114		29,335		3,779		12.9	%

Retail separate accounts	Retail separate accounts	42,475		22,398		20,077		89.6	%	79,987		48,112		31,875		66.3	%	Retail separate accounts	45,312		42,475		2,837		6.7	%	94,915		79,987		14,928		18.7	%
Institutional accounts	Institutional accounts	35,782		24,606		11,176		45.4	%	68,220		47,523		20,697		43.6	%	Institutional accounts	38,663		37,367		1,296		3.5	%	81,560		71,064		10,496		14.8	%
Structured products		1,585		417		1,168		280.1	%	2,844		1,991		853		42.8	%

Other products		478		554		(76)		(13.7)	%	726		1,350		(624)		(46.2)	%

Total investment management fees	Total investment management fees	193,510		110,550		82,960		75.0	%	366,779		230,838		135,941		58.9	%	Total investment management fees	185,024		193,510		(8,486)		(4.4)	%	391,841		366,779		25,062		6.8	%
Distribution and service fees	Distribution and service fees	23,450		8,889		14,561		163.8	%	43,798		18,349		25,449		138.7	%	Distribution and service fees	17,159		23,450		(6,291)		(26.8)	%	37,166		43,798		(6,632)		(15.1)	%
Administration and shareholder service fees	Administration and shareholder service fees	25,877		13,289		12,588		94.7	%	48,437		27,942		20,495		73.3	%	Administration and shareholder service fees	21,982		25,877		(3,895)		(15.1)	%	46,326		48,437		(2,111)		(4.4)	%
Other income and fees	Other income and fees	1,174		166		1,008		607.2	%	1,894		331		1,563		472.2	%	Other income and fees	1,142		1,174		(32)		(2.7)	%	2,414		1,894		520		27.5	%
Total revenues	Total revenues	$	244,011	$	132,894	$	111,117	83.6	%	$	460,908	$	277,460	$	183,448	66.1	%	Total revenues	$	225,307	$	244,011	$	(18,704)	(7.7)	%	$	477,747	$	460,908	$	16,839	3.7	%

Investment Management Fees

Investment management fees are earned based on a percentage of assets under management and are paid pursuant to the terms of the respective investment management contracts, which generally require monthly or quarterly payments. Investment management fees ~~increased~~decreased by ~~$83.0~~$8.5 million, or ~~75.0%, and $135.9 million, or 58.9%~~4.4%, for the three months ended June 30, 2022, and increased $25.1 million, or 6.8%, for the six months ended June 30, ~~2021, respectively,~~2022, compared to the same periods in the prior year. The ~~increase~~decrease during the three-month period in investment management fees was due to a decrease in average assets under management of $1.5 billion, or 0.9%, as well as a lower blended fee rate, partially offset by the addition of Stone Harbor and Westchester assets under management. The increase during the ~~three- and six- month periods ended June 30, 2021~~six-month period in investment management fees was due to an increase in ~~average assets under management of $74.7 billion, or 76.1% and $61.6 million, or 60.4%, respectively, primarily as a result of market performance, the AGI Transaction and positive net flows.~~

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average assets under management of $17.1 billion, or 10.5%, as a result of the Transactions, partially offset by a lower blended fee rate.

Distribution and Service Fees

Distribution and service fees are sales- and asset-based fees earned from open-end funds for marketing and distribution services. Distribution and service fees ~~increased~~decreased by ~~$14.6~~$6.3 million, or ~~163.8%~~26.8%, and ~~$25.4~~$6.6 million, or ~~138.7%~~15.1%, for the three and six months ended June 30, ~~2021,~~2022, respectively, compared to the same periods in the prior year, due primarily to ~~higher average assets~~lower sales for open-end funds in share classes that have sales-based distribution and service ~~fees primarily as a result of market performance and the AGI Transaction.~~fees.

Administration and Shareholder Service Fees

Administration and shareholder service fees represent fees earned for fund administration and shareholder services from our ~~open-end mutual~~U.S. retail funds, ETFs, and certain of our closed-end funds. Fund administration and shareholder service fees ~~increased~~decreased by ~~$12.6~~$3.9 million, or ~~94.7%~~15.1%, and ~~$20.5~~$2.1 million, or ~~73.3%~~4.4%, for the three and six months ended June 30, ~~2021,~~2022, respectively, compared to the same periods in the prior year primarily due to the ~~increase~~decrease in average assets under management for our open-end and closed-end funds during the periods ~~primarily~~ as a result of market performance ~~the AGI Transaction~~ and ~~positive~~ net ~~flows.~~outflows.

Other Income and Fees

Other income and fees primarily represent fees related to other ~~fee earning~~fee-earning assets and contingent sales charges earned from investor redemptions of certain shares sold without a front-end sales charge. Other income and fees increased by ~~$1.0~~$0.5 million, or ~~607.2%, and $1.6 million, or 472.2%~~27.5%, for the ~~three and~~ six months ended June 30, ~~2021, respectively,~~2022, compared to the same ~~periods~~period in the prior ~~year~~year. The increase for the six months ended June 30, 2022 was primarily due ~~fees associated with other fee earning assets as a result of~~to higher redemption income in the ~~AGI Transaction.~~period.

Operating Expenses

Operating expenses by category were as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021 vs. 2020		%		2021		2020		2021 vs. 2020		%		(in thousands)	2022		2021		2022 vs. 2021		%		2022		2021		2022 vs. 2021		%
Operating expenses	Operating expenses																	Operating expenses
Employment expenses	Employment expenses	$	87,630	$	60,163	$	27,467	45.7	%	$	179,389	$	126,293	$	53,096	42.0	%	Employment expenses	$	89,360	$	87,630	$	1,730	2.0	%	$	195,353	$	179,389	$	15,964	8.9	%
Distribution and other asset-based expenses	Distribution and other asset-based expenses	36,021		17,345		18,676		107.7	%	68,315		36,754		31,561		85.9	%	Distribution and other asset-based expenses	28,583		36,021		(7,438)		(20.6)	%	61,429		68,315		(6,886)		(10.1)	%
Other operating expenses	Other operating expenses	21,946		17,436		4,510		25.9	%	41,526		36,321		5,205		14.3	%	Other operating expenses	31,559		21,946		9,613		43.8	%	63,271		41,526		21,745		52.4	%
Other operating expenses of CIP	Other operating expenses of CIP	659		2,179		(1,520)		(69.8)	%	1,218		8,928		(7,710)		(86.4)	%	Other operating expenses of CIP	649		659		(10)		(1.5)	%	1,389		1,218		171		14.0	%
Restructuring and severance		—		420		(420)		(100.0)	%	—		420		(420)		(100.0)	%

Change in fair value of contingent consideration																		Change in fair value of contingent consideration	2,900		—		2,900		N/M		2,900		—		2,900		N/M
Depreciation expense	Depreciation expense	981		1,196		(215)		(18.0)	%	2,079		2,454		(375)		(15.3)	%	Depreciation expense	962		981		(19)		(1.9)	%	1,897		2,079		(182)		(8.8)	%
Amortization expense	Amortization expense	10,363		7,533		2,830		37.6	%	19,828		15,066		4,762		31.6	%	Amortization expense	14,624		10,363		4,261		41.1	%	29,286		19,828		9,458		47.7	%
Total operating expenses	Total operating expenses	$	157,600	$	106,272	$	51,328	48.3	%	$	312,355	$	226,236	$	86,119	38.1	%	Total operating expenses	$	168,637	$	157,600	$	11,037	7.0	%	$	355,525	$	312,355	$	43,170	12.9	%

N/M = Not Meaningful

Employment Expenses

Employment expenses consist of fixed and variable compensation and related employee benefit costs. Employment expenses for the three and six months ended June 30, ~~2021~~2022 were ~~$87.6~~$89.4 million and ~~$179.4~~$195.4 million, which represented an increase of ~~$27.5~~$1.7 million, or ~~45.7%~~2.0%, and ~~$53.1~~$16.0 million, or ~~42.0%~~8.9%, respectively, compared to the same ~~period~~periods in the prior year. The ~~increase for the three and six months ended June 30, 2021 was~~increases in both periods were primarily due to ~~increased profit-based compensation.~~the addition of Stone Harbor and Westchester.

Distribution and Other Asset-Based Expenses

Distribution and other asset-based expenses consist primarily of payments to third-party client intermediaries for providing services to investors in sponsored investment products. These payments are primarily based on assets under management or on a percentage of sales. ~~These~~Distribution and other asset-based expenses also include the amortization of deferred sales commissions related to up-front commissions on shares sold without a front-end sales charge to shareholders. The deferred sales commissions are amortized on a straight-line basis over the ~~periods in which~~period commissions are ~~generally~~ recovered from distribution fee revenues and contingent sales charges received upon redemption of shares. During the three and six months ended June 30, 2022, distribution and other asset-based expenses decreased $7.4 million, or 20.6%, and $6.9 million, or 10.1%, respectively, as

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and contingent sales charges received from shareholders of the funds upon redemption of their shares. Distribution and other asset-based expenses increased by $18.7 million, or 107.7%, and $31.6 million, or 85.9%, for the three and six months ended June 30, 2021, as compared to the same periods in the prior year primarily due to ~~an increased percentage of~~lower sales and a decrease in assets under management in share classes that have sales- and asset-based distribution and other asset-based ~~expenses primarily as a result of the AGI Transaction.~~expenses.

Other Operating Expenses

Other operating expenses primarily consist of investment research and technology costs, professional fees, travel and distribution related costs, rent and occupancy expenses, and other business costs. ~~Other operating expenses for~~For the three and six months ended June 30, ~~2021~~2022, other operating expenses increased by ~~$4.5~~$9.6 million, or ~~25.9%~~43.8%, and $21.7 million, or 52.4%, respectively, as compared to the same ~~period~~periods in the prior year primarily due ~~to acquisition related professional fees~~the addition of Stone Harbor and ~~additional expenses~~Westchester, as ~~a result of the newly established affiliated manager, NFJ. Other operating expenses for the six months ended June 30, 2021 increased $5.2 million, or 14.3%,~~well as ~~compared to the same period in the prior year primarily due to acquisition related professional fees in the current year, partially offset by decreased~~higher travel and related ~~expenses primarily as a result of the impact of COVID-19 on the current operating environment.~~expenses.

Other Operating Expenses of CIP

Other operating expenses of CIP ~~decreased $1.5 million, or 69.8%, for~~remained consistent during the three ~~months ended June 30, 2021~~ and ~~$7.7 million, or 86.4%, for the~~ six months ended June 30, ~~2021~~2022, compared to the same periods in the prior year.

Change in Fair Value of Contingent Consideration

Our contingent consideration related to our NFJ, Westchester and Stone Harbor transactions are recorded at fair value each reporting date taking into consideration changes in various estimates, including probability of success, discount rates and amount of time until the conditions of the contingent payments are achieved. The ~~decreases~~change in fair value is recorded in the current period as a gain or loss. The change in value of continent consideration of $2.9 million during the ~~six-month periods were~~three and six months ended June 30, 2022 was primarily ~~due~~attributable to higher future revenue projections and the ~~costs associated with the issuance~~time value of ~~a new CLO in the prior year periods that did not recur.~~money.

Depreciation Expense

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements. Depreciation expense ~~decreased $0.2 million, or 18.0%, and $0.4 million, or 15.3%,~~remained consistent during ~~the~~ three and six months ended June 30, ~~2021, respectively,~~2022, compared to the same periods in the prior ~~year, primarily due to certain assets becoming fully depreciated.~~year.

Amortization Expense

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives. Amortization expense increased $4.3 million, or 41.1%, and $9.5 million, or 47.7%, for the three and six months ended June 30, ~~2021~~2022, respectively, compared to the same periods in the prior ~~year~~year. The increase during the three-month period was due to the additional amortization associated with the ~~AGI Transaction.~~acquisitions of Stone Harbor and Westchester. The increase during the six-month period was due to the additional amortization associated with the Transactions.

Other Income (Expense)

Other Income (Expense), net by category were as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021 vs. 2020		%		2021		2020		2021 vs. 2020		%		(in thousands)	2022		2021		2022 vs. 2021		%		2022		2021		2022 vs. 2021		%
Other Income (Expense)	Other Income (Expense)																	Other Income (Expense)
Realized and unrealized gain (loss) on investments, net	Realized and unrealized gain (loss) on investments, net	$	2,494	$	7,114	$	(4,620)	(64.9)	%	$	3,385	$	(430)	$	3,815	NM		Realized and unrealized gain (loss) on investments, net	$	(10,543)	$	2,494	$	(13,037)	(522.7)	%	$	(13,525)	$	3,385	$	(16,910)	(499.6)	%
Realized and unrealized gain (loss) of CIP, net	Realized and unrealized gain (loss) of CIP, net	2,747		(6,744)		9,491		NM		(1,940)		(15,413)		13,473		(87.4)	%	Realized and unrealized gain (loss) of CIP, net	(21,659)		2,747		(24,406)		(888.5)	%	(35,003)		(1,940)		(33,063)		N/M
Other income (expense), net	Other income (expense), net	826		(805)		1,631		NM		2,597		(193)		2,790		NM		Other income (expense), net	571		826		(255)		(30.9)	%	858		2,597		(1,739)		(67.0)	%
Total Other Income (Expense), net	Total Other Income (Expense), net	$	6,067	$	(435)	$	6,502	NM		$	4,042	$	(16,036)	$	20,078	NM		Total Other Income (Expense), net	$	(31,631)	$	6,067	$	(37,698)	(621.4)	%	$	(47,670)	$	4,042	$	(51,712)	(1,279.4)	%

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Realized and unrealized gain (loss) on investments, net

Realized and unrealized gain (loss) on investments, net changed during the three and six months ended June 30, ~~2021~~2022 by ~~$(4.6)~~$(13.0) million and ~~$3.8~~$(16.9) million, respectively, as compared to the same periods in the prior year. The realized and unrealized gains and losses during the ~~three and six months ended June 30, 2021~~periods reflected changes in overall market conditions experienced during the periods.

Realized and unrealized gain (loss) of CIP, net

Realized and unrealized gain (loss) of CIP, net changed ~~$9.5~~$(24.4) million and ~~$13.5~~$(33.1) million during the three and six months ended June 30, ~~2021,~~2022, respectively, compared to the same periods in the prior year. The ~~change~~changes for the three and six months ended June 30, ~~2021~~2022 consisted primarily of an increase in ~~net realized and~~ unrealized ~~gains~~losses of ~~$90.5~~$70.4 million and ~~$201.7~~$124.8 million,

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respectively, due to changes in market values of leveraged loans, partially offset by changes in unrealized ~~losses~~gains of ~~$81.0~~

$46.0 million and ~~$188.2~~$91.7 million, respectively, related to the value of the notes payable.

Other income (expense), net

~~Other income (expense), net increased by $1.6~~ decreased $0.3 million and ~~$2.8~~$1.7 million ~~for~~during the three and six months ended June 30, ~~2021,~~2022, respectively, compared to the same periods in the prior ~~year,~~year. The decreases during the three- and six-month periods were primarily due to ~~increased~~decreased earnings from equity method investments during the current year periods.

Interest Income (Expense)

Interest Income (Expense), net by category were as follows:


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	(in thousands)	2021		2020		2021 vs. 2020		%		2021		2020		2021 vs. 2020		%		(in thousands)	2022		2021		2022 vs. 2021		%		2022		2021		2022 vs. 2021		%
Interest Income (Expense)	Interest Income (Expense)																	Interest Income (Expense)
Interest expense	Interest expense	$	(2,256)	$	(3,126)	$	870	(27.8)	%	$	(4,570)	$	(6,325)	$	1,755	(27.7)	%	Interest expense	$	(2,825)	$	(2,256)	$	(569)	25.2	%	$	(5,104)	$	(4,570)	$	(534)	11.7	%
Interest and dividend income	Interest and dividend income	166		242		(76)		(31.4)	%	302		994		(692)		(69.6)	%	Interest and dividend income	529		166		363		218.7	%	857		302		555		183.8	%
Interest and dividend income of investments of CIP	Interest and dividend income of investments of CIP	22,562		28,634		(6,072)		(21.2)	%	46,438		57,863		(11,425)		(19.7)	%	Interest and dividend income of investments of CIP	22,412		22,562		(150)		(0.7)	%	42,792		46,438		(3,646)		(7.9)	%
Interest expense of CIP	Interest expense of CIP	(14,452)		(28,150)		13,698		(48.7)	%	(28,900)		(52,636)		23,736		(45.1)	%	Interest expense of CIP	(14,416)		(14,452)		36		(0.2)	%	(26,504)		(28,900)		2,396		(8.3)	%
Total Interest Income (Expense), net	Total Interest Income (Expense), net	$	6,020	$	(2,400)	$	8,420	NM		$	13,270	$	(104)	$	13,374	NM		Total Interest Income (Expense), net	$	5,700	$	6,020	$	(320)	(5.3)	%	$	12,041	$	13,270	$	(1,229)	(9.3)	%

Interest Expense

Interest expense ~~decreased $0.9~~increased $0.6 million, or ~~27.8%~~25.2%, and ~~$1.8~~$0.5 million, or ~~27.7%~~11.7%, ~~for~~during the three and six months ended June 30, ~~2021,~~2022, respectively, compared to the same periods in the prior year. The ~~decreases~~increases were ~~due~~attributable to ~~a decrease~~higher average debt balances outstanding in the ~~average debt outstanding~~current year periods.

Interest and ~~a lower average interest rate~~Dividend Income

Interest and dividend income increased $0.4 million, or 218.7%, and $0.6 million, or 183.8%, during the three and six months ended June 30, 2022, respectively, compared to the same periods in the prior year.

~~Interest and Dividend Income~~ The increases were attributable to higher average investment balances during the current year periods compared to prior year periods.

Interest and ~~dividend income is earned on cash equivalents and our marketable securities.~~Dividend Income of Investments of CIP

Interest and dividend income of investments of CIP decreased ~~$0.1~~$0.2 million, or ~~31.4%~~0.7%, and ~~$0.7~~$3.6 million, or ~~69.6%~~7.9%, for the three and six months ended June 30, ~~2021,~~2022, respectively, compared to the same periods in the prior year. The decreases were primarily due to lower ~~interest rates earned on cash as compared to the corresponding periods in the prior year.~~

~~Interest and Dividend Income of Investments of CIP~~

Interest and dividend income of investments of CIP decreased $6.1 million, or 21.2%, and $11.4 million, or 19.7%, for the three and six months ended June 30, 2021, respectively, compared to the same periods in the prior year. The decreases were primarily due to a decrease inaverage investment balances partially offset by higher average interest rates.

~~Table of Contents~~

Interest Expense of CIP

Interest expense of CIP represents interest expense on the notes payable of CIP. Interest expense of CIP decreased ~~by $13.7~~$36 thousand, or 0.2%, and $2.4 million, or ~~48.7%, and $23.7 million, or 45.1%~~8.3%, for the three and six months ended June 30, ~~2021,~~2022, respectively, compared to the same periods in the prior year. The ~~decrease~~decreases during the three and six months ended June 30, ~~2021 was~~2022 were primarily due to lower ~~variable interest rates partially offset by higher~~ average debt balances of CIP during the current year ~~periods, as well as $3.3 million of amortization of discounts on notes payable in the prior year-to-date period that did not recur.~~periods.

Income Tax Expense (Benefit)

The provision for income taxes reflected U.S. federal, state and local taxes at an estimated effective tax rate of ~~22.6%~~38.4% and ~~50.9%~~22.6% for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~decrease in the~~higher estimated effective tax rate for the six months ended June 30, ~~2021 as compared to the same period in the prior year~~2022 was primarily due to ~~income tax expense associated with~~ valuation allowances recorded in the current year for the tax effects of unrealized losses on certain Company ~~investments in the corresponding prior year period that did not recur.~~ investments.

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Liquidity and Capital Resources

Certain Financial Data

The following table summarizes certain financial data relating to our liquidity and capital resources:


		June 30, 2021		December 31, 2020		Change					June 30, 2022		December 31, 2021		Change
(in thousands)	(in thousands)					2021 vs. 2020		%		(in thousands)					2022 vs. 2021		%
Balance Sheet Data	Balance Sheet Data									Balance Sheet Data
Cash and cash equivalents	Cash and cash equivalents	$	275,439	$	246,511	$	28,928	11.7	%	Cash and cash equivalents	$	250,530	$	378,921	$	(128,391)	(33.9)	%
Investments	Investments	81,775		64,944		16,831		25.9	%	Investments	102,840		108,890		(6,050)		(5.6)	%
Contingent consideration	Contingent consideration	137,664		—		137,664		—	%	Contingent consideration	133,628		162,564		(28,936)		(17.8)	%
Debt	Debt	190,224		201,212		(10,988)		(5.5)	%	Debt	255,832		266,346		(10,514)		(3.9)	%
Redeemable noncontrolling interests	Redeemable noncontrolling interests	131,525		115,513		16,012		13.9	%	Redeemable noncontrolling interests	139,147		138,965		182		0.1	%
Total equity	Total equity	789,837		720,940		68,897		9.6	%	Total equity	791,705		836,627		(44,922)		(5.4)	%

Six Months Ended June 30, Change
(in thousands) 2021 2020 2021 vs. 2020
Cash Flow Data
Provided by (Used In):
Operating Activities $ 239,180 $ (449,712) $ 688,892
Investing Activities (5,527) 9,249 (14,776)
Financing Activities (167,645) 370,577 (538,222)


	Six Months Ended June 30,				Change
(in thousands)	2022		2021		2022 vs. 2021		%
Cash Flow Data
Provided by (Used in):
Operating activities	$	37,611	$	239,180	$	(201,569)	(84.3)	%
Investing activities	(24,442)		(5,527)		(18,915)		342.2	%
Financing activities	(240,177)		(167,645)		(72,532)		43.3	%

Overview

At June 30, ~~2021,~~2022, we had ~~$275.4~~$250.5 million of cash and cash equivalents and ~~$81.8~~$102.8 million of investments, which included ~~$54.4~~$77.2 million of investment securities, compared to ~~$246.5~~$378.9 million of cash and cash equivalents and ~~$64.9~~$108.9 million of investments, which included ~~$40.0~~$80.3 million of investment securities, at December 31, ~~2020.~~

~~At June 30, 2021, we had $193.8 million of principal outstanding under our term loan maturing June 1, 2024 and no outstanding borrowings under our $100.0 million revolving credit facility.~~2021.

Uses of Capital

Our main uses of capital related to operating activities comprise employee compensation and related benefit costs, ~~including payment of~~which include annual incentive compensation, ~~interest on our indebtedness, income taxes and~~ other operating expenses,

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which primarily consist of investment research, technology costs, professional fees, distribution and occupancy ~~costs.~~costs; interest on our indebtedness; and income taxes. Annual incentive compensation, which is one of the largest annual operating cash expenditures, is typically paid in the first quarter of the year. In the first quarters of ~~2021~~2022 and ~~2020,~~2021, we paid ~~$96.9~~$151.6 million and ~~$84.7~~$96.9 million, respectively, in incentive compensation earned during the years ended December 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

In addition to operating activities, other uses of cash could include: (i) investments in organic growth, including ~~expanding our distribution efforts; (ii)~~ seeding or launching new products ~~including adding seed capital to expand distribution opportunities~~ and ~~sponsoring CLO issuances; (iii)~~expanding distribution; (ii) debt principal payments ~~on debt outstanding~~ through scheduled amortization, excess cash flow payment requirements or additional paydowns; ~~(iv)~~(iii) dividend payments to common stockholders; ~~(v)~~(iv) repurchases of our common stock, or withholding obligations for the net settlement of employee share transactions; ~~(vi)~~(v) investments in our infrastructure; ~~(vii)~~(vi) investments in inorganic growth opportunities ~~which~~that may require upfront and/or future payments; ~~(viii)~~(vii) integration costs, including restructuring and severance, related to acquisitions, if any; and ~~(ix)~~(viii) purchases of affiliate noncontrolling interests.

Capital and Reserve Requirements

We operate aan SEC registered broker-dealer subsidiary that is subject to certain rules regarding minimum net capital. The broker-dealer is required to maintain a ratio of "aggregate indebtedness" to "net capital," as defined, which may not exceed 15 to 1 and must also maintain a minimum amount of net capital. Failure to meet these requirements could result in adverse consequences to us, including additional reporting requirements, a lower required ratio of aggregate indebtedness to net capital, or interruption of our business.At June 30, ~~2021,~~2022, the ratio of aggregate indebtedness to net capital of our broker-dealer was below the maximum allowed, and net capital was significantly greater than the required minimum.

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Balance Sheet

Cash and cash equivalents consist of cash in banks and money market fund investments. Investments consist primarily of investments in our sponsored funds. CIP represent investment products for which we provide investment management services and where we either have ~~either~~ a controlling financial interest or we are considered the primary beneficiary of an investment product that is considered a variable interest entity.

Operating Cash Flow

Net cash provided by operating activities of ~~$239.2~~$37.6 million for the six months ended June 30, ~~2021~~2022 changed by ~~$688.9~~$201.6 million from net cash ~~used in~~provided by operating activities of ~~$449.7~~$239.2 million for the same period in the prior year primarily due to ~~an increase~~a $164.2 million reduction in ~~net~~ sales of investments by CIP ~~of $618.4 million in~~and increased compensation and benefit payments during the current year period compared to the ~~prior year~~prior-year period.

Investing Cash Flow

Cash flows from investing activities consist primarily of capital expenditures and other investing activities related to our business operations. Net cash used in investing activities was ~~$5.5~~$24.4 million for the six months ended June 30, ~~2021~~2022 compared to net cash ~~provided by~~used in investing activities of ~~$9.2~~$5.5 million in the same period for the prior year. The ~~primary~~increase in cash used in investing activities ~~for~~during the six months ended June 30, ~~2021 were $4.3 million of capital expenditures and other asset purchases. The primary investing activities~~2022 compared to the prior year period related to cash paid for the Stone Harbor acquisition in the six months ended June 30, ~~2020 were related to the consolidation of investment products.~~2022.

Financing Cash Flow

Cash flows from financing activities consist primarily of ~~the issuance of~~transactions related to our common ~~stock, return of capital through repurchases of common~~ shares, ~~dividends, withholding obligations for the net share settlement of employee share transactions,~~ issuance and repayment of debt by us and our CIP, payments of contingent consideration and changes to noncontrolling interests. Net cash ~~related to financing activities changed by $538.2 million to net cash~~ used in financing activities ofincreased by $72.5 million to $240.2 million for the six months ended June 30, 2022 from $167.6 million for the six months ended June 30, ~~2021 as compared to net cash provided by financing activities of $370.6 million for the six months ended June 30, 2020.~~2021. The net change was primarily due to an increase in repurchases of common shares of $57.5 million and contingent consideration payments of $33.0 million during the current year period that did not occur in the prior year period, partially offset by a decrease of ~~$558.7~~$21.0 million in net borrowings of CIP during the six months ended June 30, ~~2021~~2022 compared to the prior year period.

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C~~redit~~Credit Agreement

The Company's credit agreement, as amended (the "Credit Agreement"), ~~is comprised of~~comprises (i) ~~$365.0~~a $275.0 million ofterm loan with a seven-year term ~~debt~~ (the "Term Loan") expiring in ~~June 2024~~September 2028, and (ii) a ~~$100.0~~$175.0 million ~~five-year~~ revolving credit facility ~~(the "Credit Facility")~~with a five-year term expiring in September 2026. During the six months ended June ~~2022.~~30, 2022, the Company repaid $11.4 million outstanding under its Term Loan. At June 30, ~~2021, $193.8~~2022, $262.9 million ~~remained~~was outstanding under the Term Loan, and ~~there were~~the Company had no outstanding borrowings under ~~the Credit Facility.~~its revolving credit facility. In accordance with ~~Accounting Standards Codification~~ASC 835, Interest, the amounts outstanding under the Company's Term Loan are presented onin the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were ~~$3.6~~$7.1 million as of June 30, ~~2021.~~2022.

~~Contractual Obligations~~

~~Our contractual obligations are summarized in our 2020 Annual Report on Form 10-K. As of June 30, 2021, there have been no material changes in our contractual obligations since December 31, 2020.~~

Critical Accounting Policies and Estimates

Our financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates. Actual results will vary from these estimates. A discussion of our critical accounting policies and estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2020~~2021 Annual Report on Form 10-K. A complete description of our significant accounting policies is included in our ~~2020~~2021 Annual Report on Form 10-K. There were no material changes in our critical accounting policies and estimates in the three months ended June 30, ~~2021.~~2022.

Recently Issued Accounting Pronouncements

For a discussion of accounting standards, see Note 2 in our condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is primarily exposed to market risk associated with unfavorable movements in interest rates and securities prices. During the three and six months ended June 30, ~~2021,~~2022, there were no material changes to the information contained in Part II, Item 7A of the Company's 2020 Annual Report on Form 10-K.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC's rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of June 30, ~~2021,~~2022, the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth in response to Item 103 of Regulation S-K under "Legal Proceedings" is incorporated by reference from Part I, Financial Information Item 1. "Financial Statements" Note 14 "Commitments and Contingencies" of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to the Company’s risk factors from those previously reported in our ~~2020~~2021 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~As of June 30, 2021, an~~An aggregate of ~~4,930,045~~5,680,045 shares of our common stock ~~had~~have been authorized to be repurchased under the share repurchase program since it was originally approved by our Board of Directors in ~~2010, and 675,809~~2010. As of June 30, 2022, 932,094 shares remained available for repurchase. Under the terms of the program, we may repurchase shares of our common stock from time to time at our discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions. The program, which has no specified term, may be suspended or terminated at any time.

The following table sets forth information regarding our share repurchases in each month during the quarter ended June 30, ~~2021:~~2022:

Period Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs (2) Maximum number of shares that may yet be purchased under the plans or programs (2)
April 1-30, 2021 — $ — — 702,730
May 1-31, 2021 12,988 $ 272.54 12,988 689,742
June 1-30, 2021 13,933 $ 284.17 13,933 675,809
Total 26,921 26,921


Period	Total number of shares purchased	Average price paid per share (1)		Total number of shares purchased as part of publicly announced plans or programs (2)	Maximum number of shares that may yet be purchased under the plans or programs (2)
April 1-30, 2022	—	$	—	—	403,997
May 1-31, 2022	121,857	$	177.94	121,857	1,032,140
June 1-30, 2022	100,046	$	183.01	100,046	932,094
Total	221,903			221,903

(1)Average price paid per share is calculated on a settlement basis and excludes commissions.

(2)The share repurchases above were completed pursuant to a program announced in the fourth quarter of 2010 and most recently expanded in May ~~2020.~~2022. This repurchase program is not subject to an expiration date.

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There were no unregistered sales of equity securities during the period covered by this Quarterly Report. Shares of our common stock purchased by participants in our Employee Stock Purchase Plan were delivered to participant accounts via open market purchases at fair value by the third-party administrator under the plan. We do not reserve shares for this plan or discount the purchase price of the shares.

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Item 6. Exhibits


Exhibit Number						Description

~~10.1~~*						Amended and Restated Virtus Investment Partners, Inc. Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 17, 2021

31.1						Certification of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification of the Registrant’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101						The following information is formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (Unaudited) as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, (iii) Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, (iv) Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, (v) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).

104						Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)

*~~Management contract, compensatory plan or arrangement.~~

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August ~~6, 2021~~9, 2022


			VIRTUS INVESTMENT PARTNERS, INC.
			(Registrant)

			By:			/s/ Michael A. Angerthal
						Michael A. Angerthal
						Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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