Horizon Finance (HRZN) Q1 2026 earnings summary

Executive summary

• Completed merger with Monroe Capital Corporation (MRCC), issuing 20.4 million shares and receiving $141.1 million in cash, significantly increasing equity capital and scale; former MRCC stockholders now own 29.86% of the combined company.

• Formed RoHo joint venture with ROTH Capital/CR Financial Holdings to provide growth financing to small and micro-cap public companies.

• Achieved second consecutive quarter of portfolio growth, funding five investments totaling $120 million and growing total portfolio to nearly $700 million.

• Declared regular and special cash distributions totaling $0.27 per share for Q3 2026, reflecting confidence in future earnings and spillover income.

• Focus remains on secured debt investments in technology, life science, healthcare information/services, and sustainability sectors.

Financial highlights

• Net investment income for Q1 2026 was $9.0 million ($0.19 per share), down from $10.7 million ($0.27 per share) year-over-year; NAV per share at $6.98 at quarter end.

• Total investment income for Q1 2026 was $24.1 million, down from $25 million in Q1 2025, mainly due to lower fee-related income.

• Portfolio yield on debt investments reached 15.2%, among the highest in the BDC industry.

• Total expenses were $14.8 million, up from $13.4 million in Q1 2025; interest expense was $8.2 million, $0.5 million lower year-over-year.

• Net realized loss on investments was $0.2 million; net unrealized depreciation was $4.6 million, a significant improvement from $32.2 million in the prior year.

Outlook and guidance

• Expect continued portfolio growth in Q2 and beyond, driven by a strong pipeline and increased capital base.

• Anticipate NII will cover declared distributions over time, supported by expanded capital and predictive pricing strategy.

• Board declared regular and special monthly distributions for Q2 and Q3 2026.

• Management expects current cash, operations, and credit facilities to be sufficient for at least the next 12 months.

• Expect to record a one-time $4.3 million transaction expense in Q2 related to the merger.