La Rosa Holdings Corp. (NASDAQ: LRHC) announced it will restate its financial statements for 2023, 2024 and quarterly periods in 2025 after its audit committee determined the company incorrectly recorded certain property management fee revenue.

The company said it recorded property management fee revenue on a gross basis, including tenant rent payments, when it should have recorded the revenue on a net basis as an agent rather than a principal under accounting standards. The error resulted in overstated revenue during the affected periods.

The company also overstated cost of revenue by the same amount, as payments to landlords related to tenant rent were incorrectly presented as cost of revenue. The corrections will not impact gross profit or other financial statement items, according to the announcement.

La Rosa Holdings said it identified material weaknesses in internal control over financial reporting, concluding that its internal controls and disclosure procedures were not effective as of December 31, 2024. Management stated it has taken steps to address these control deficiencies.

The company plans to file restated consolidated financial statements for the year ended December 31, 2024 in its upcoming annual report for 2025, which will also include restated quarterly financial information for the affected periods. The filing is expected to occur as soon as reasonably practicable.

Previously issued earnings releases and similar communications for the affected periods should no longer be relied upon, the company stated. La Rosa Holdings does not plan to file separate amended reports for the individual periods requiring restatement.