Financial Data and Key Metrics Changes - Net investment income (NII) per share for Q3 2025 was $0.38, corresponding to an annualized return on equity (ROE) of 10.3% [5][26] - GAAP net income per share was $0.29, corresponding to an annualized ROE of 8% [6][26] - Net asset value (NAV) per share decreased by 0.6% to $14.66 compared to the prior quarter [6] - Total investment income for the quarter was approximately $82.6 million, up 1.6% from the previous quarter [24] Business Line Data and Key Metrics Changes - New commitments totaled $138 million across 21 transactions during the quarter [6][16] - The weighted average spread on new commitments was 521 basis points [16] - The weighted average yield at cost of the directly originated lending portfolio decreased to 10.3% from 10.5% [24][19] Market Data and Key Metrics Changes - The U.S. economy showed resilience, easing recession concerns, but inflation remained elevated [15] - The Federal Reserve cut interest rates by 25 basis points in both September and October [15] - Increased sponsor M&A activity was noted, driven by private equity firms needing to deploy capital [15][41] Company Strategy and Development Direction - The company aims to leverage its strong position in the middle market to source attractive investment opportunities [7][9] - The focus remains on maintaining a diversified portfolio with a significant portion in first lien loans [9][18] - The company is actively working on initiatives to offset the impact of declining base rates on net investment income [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about ongoing M&A activity due to improved market conditions and reduced volatility from tariffs [41] - The company anticipates a positive impact on portfolio company credit quality if base rates decline as expected [20] - Management is focused on a measured approach to deploying capital while maintaining portfolio granularity [46] Other Important Information - The board declared a quarterly dividend of $0.38 per share, payable on December 23, 2025 [11] - The company experienced an increase in non-accrual investments, which now represent 3.1% of the portfolio at fair value [22] Q&A Session Summary Question: What drove the increase in non-accruals? - Management noted that there was no common theme among the companies that went on non-accrual, with some impacted by tariffs and others by weakened consumer sentiment [32][33] Question: Is the increase in M&A activity sustainable through 2026? - Management indicated that ongoing demand for M&A activity is expected due to private equity firms needing to deploy capital and improved market conditions [40][41] Question: How is the company evaluating the timing of mitigating actions against lower base rates? - Management emphasized a deliberate approach to deployment, balancing the need to return to target leverage with the opportunity to create a granular portfolio [46] Question: What are the latest thoughts on dividend coverage given the current rate outlook? - Management confirmed that the dividend remains intact, with several levers in place to mitigate the effects of lower base rates [60]

Financial Performance - Net investment income for the quarter ended September 30, 2025, was $353 million, or $038 per share[9] - Net realized and change in unrealized gains (losses) on investments for the quarter ended September 30, 2025, were $(79) million, or $(008) per share[9] - Net asset value per share as of the end of the quarter was $1466, a decrease of 06% compared to June 30, 2025[9] Investment Portfolio - New investment commitments made during the quarter totaled $138 million across 21 companies for an average new commitment of $66 million[9] - Gross fundings for the quarter, excluding revolver fundings, totaled $142 million[9] - The company received a net repayment of approximately $97 million from Merx Aviation Finance, LLC during the September quarter, reducing its exposure to approximately 33% of the total portfolio, at fair value[9] - The total investment portfolio was $318 billion, with 95% in direct origination and other investments, 3% in Merx Aviation, and 2% in acquired non-direct origination assets[10, 11] - Non-accrual investments represented 31% of the total portfolio at fair value[10] Portfolio Characteristics - The direct origination portfolio had a weighted average yield of 103% and a weighted average spread over SOFR of 559 bps[10] - First lien investments comprised 98% of the direct origination portfolio, which was 100% floating rate and 91% sponsored[10] - 93% of the direct origination portfolio was pursuant to co-investment order[10] Debt and Funding - Net leverage was 135x as of September 30, 2025[9] - Lender commitments under the Amended Senior Secured Facility decreased from $1660 billion to $1610 billion[8] - The weighted average annualized interest cost on total debt obligations was 6368%[32]

Core Insights - MidCap Financial Investment (MFIC) reported quarterly earnings of $0.38 per share, matching the Zacks Consensus Estimate, but down from $0.44 per share a year ago [1] - The company posted revenues of $82.58 million for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.79%, and showing a year-over-year increase from $82.14 million [2] - MidCap Financial shares have declined approximately 9.3% year-to-date, contrasting with the S&P 500's gain of 15.6% [3] Earnings Outlook - The future performance of MidCap Financial's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $82.51 million, and for the current fiscal year, it is $1.51 on revenues of $325.69 million [7] Industry Context - The Financial - Miscellaneous Services industry, to which MidCap Financial belongs, is currently ranked in the top 35% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

Financial Performance - Net investment income per share for the quarter was $0.38, a decrease of 2.6% from $0.39 for the quarter ended June 30, 2025[1]. - Net investment income for the three months ended September 30, 2025, was $35,307,000, compared to $38,135,000 for the same period in 2024, indicating a decrease of 4.8%[28]. - The company reported total investment income of $82,576,000 for the three months ended September 30, 2025, slightly up from $82,138,000 in the prior year[28]. - The net realized and change in unrealized losses for the nine months ended September 30, 2025, amounted to $(30,086,000), compared to $(21,459,000) for the same period in 2024[28]. - Management fees increased to $6,069,000 for the three months ended September 30, 2025, compared to $4,428,000 in the same period of 2024, reflecting a rise of 37.1%[28]. Asset and Investment Overview - Net asset value per share as of September 30, 2025, was $14.66, down 0.6% from $14.75 as of June 30, 2025[1]. - The company's net assets decreased to $1,367,920,000 as of September 30, 2025, from $1,404,646,000 at the end of 2024, a decline of approximately 2.6%[26]. - Total assets as of September 30, 2025, were $3.31 billion, down from $3.46 billion as of June 30, 2025[7]. - Total assets increased to $3,309,494,000 from $3,190,950,000 as of December 31, 2024, reflecting a growth of approximately 3.7%[26]. - The company continues to focus on generating current income through investments in first lien senior secured loans to U.S. middle-market companies[32]. - As of September 30, 2025, the portfolio composition consists of 95% first lien secured debt, with a weighted average yield of 10.2%[23]. - The company has maintained a floating rate debt portfolio, with $2.9 billion in floating rate amounts as of September 30, 2025, representing 100% of the total[23]. Investment Commitments and Repayments - New investment commitments during the quarter totaled $138 million, with gross fundings of $142 million[1]. - The company received a net repayment of approximately $97 million from Merx Aviation Finance, reducing its exposure to 3.3% of the total portfolio[1]. - The company upsized and extended the maturity of Bethesda CLO 1, increasing its size from $402.4 million to $646.4 million[19]. - The available remaining capacity under the Facility was $575 million as of September 30, 2025[14]. - The company did not repurchase any shares during the quarter, with a total of 16,069,776 shares repurchased since the program's inception[12]. Dividends - The Board declared a dividend of $0.38 per share, payable on December 23, 2025[3]. Forward-Looking Statements and Risks - MFIC's forward-looking statements include expectations regarding future operating results and distribution projections[33]. - The company anticipates potential impacts from supply chain disruptions, tariffs, and trade disputes on its business prospects[33]. - MFIC acknowledges risks associated with changes in economic conditions, including inflation and interest rate fluctuations[33]. - The company plans to reposition its investment portfolio and explore new strategic initiatives[33]. - MFIC's forward-looking statements are based on information available as of the date of the release and may not be updated[33].

Investment Activity - As of September 30, 2025, the company made investments totaling $400.4 million in the three months ended September 30, 2025, compared to $911.9 million in the same period of 2024[515]. - The company reported net investment activity of $(148.0) million for the three months ended September 30, 2025, down from $584.6 million in the same period of 2024[515]. - Total invested capital since the initial public offering in April 2004 reached $26.6 billion across 837 portfolio companies by September 30, 2025[519]. - As of September 30, 2025, $3.13 billion or 98.2% of the Company's investments were classified as Level 3, indicating a high proportion of private investments relative to total investments[527]. Portfolio Composition - The portfolio composition as of September 30, 2025, included 95% in first lien secured debt, up from 92% as of December 31, 2024[517]. - The weighted average yield on first lien secured debt decreased to 10.2% as of September 30, 2025, from 10.8% at the end of 2024[517]. - The average debt yielding portfolio increased from $2.76 billion to $2.94 billion, while the average yield for the total debt portfolio decreased from 11.5% to 10.3%[538]. - As of September 30, 2025, the majority of the company's debt portfolio investments bore interest at variable rates, which are generally SOFR-based and typically reset every one to six months[568]. Income and Expenses - Total investment income for the three months ended September 30, 2025 was $82.6 million, consistent with $82.1 million for the same period in 2024[536]. - For the nine months ended September 30, 2025, total investment income increased by $22.9 million, primarily driven by an increase in interest income due to a higher income-bearing investment portfolio[540]. - Net expenses for the three months ended September 30, 2025 increased by $3.3 million, primarily due to an increase in management and performance-based incentive fees of $2.9 million[541]. - For the nine months ended September 30, 2025, net expenses increased by $13.1 million, primarily driven by an increase in interest and other debt expenses of $10 million[542]. Realized and Unrealized Gains/Losses - For the three months ended September 30, 2025, the company recognized net realized losses of $19.2 million, primarily due to the write-off of Ambrosia Buyer Corp. and the restructure of New Era Technology, Inc.[543]. - For the nine months ended September 30, 2025, the company reported net realized losses of $33.3 million, driven by the restructure of Renovo, Mitel Networks, and New Era Technology, along with a partial write-off of Ambrosia Buyer Corp.[546]. - The company recognized gross unrealized gains of $44.7 million and gross unrealized losses of $33.4 million for the three months ended September 30, 2025, resulting in a net change in unrealized gains of $11.3 million[548]. - For the nine months ended September 30, 2025, the company reported gross unrealized gains of $66.8 million and gross unrealized losses of $63.6 million, leading to a net change in unrealized losses of $3.2 million[549]. Distributions and Stockholder Information - Distributions paid to stockholders during the three months ended September 30, 2025 totaled $35.5 million ($0.38 per share), compared to $54.4 million ($0.58 per share) in the same period of 2024[558]. - The company maintains an "opt out" dividend reinvestment plan for common stockholders, allowing them to receive cash dividends unless they opt out[560]. - The company may face limitations on distributions due to asset coverage tests applicable to BDCs and potential defaults under its revolving credit facility[561]. Management and Operational Changes - The company appointed Joseph Durkin as Chief Accounting Officer effective September 4, 2025[521]. - The company expects general and administrative operating expenses to increase moderately in dollar terms, particularly during periods of asset growth[514]. Financial Position and Risk Management - The company has $1.66 billion in aggregate lender commitments under the Senior Secured Facility, with $575.1 million of unused capacity as of September 30, 2025[555]. - The company anticipates that its current cash and cash equivalents, along with available borrowing capacity, will be adequate to meet cash needs for daily operations for at least the next twelve months[553]. - A 150 basis point increase in interest rates is estimated to increase net investment income by $14.7 million, while a 150 basis point decrease is estimated to decrease net investment income by $14.0 million[570]. - The company regularly measures exposure to interest rate risk and assesses whether hedging transactions are necessary to mitigate this exposure[569]. - The company may hedge against interest rate fluctuations using standard hedging instruments, but this may limit participation in benefits from lower interest rates[571]. Tax and Compliance - To maintain RIC status, the company must distribute at least 90% of ordinary income and realized net short-term capital gains, but currently expects to generate cumulative net capital gains in the foreseeable future due to substantial net capital loss carryforwards[559]. - Income from origination, structuring, closing, commitment, and other upfront fees associated with investments in portfolio companies is treated as taxable income and distributed to stockholders[562]. - The fair value of investments may fluctuate significantly due to the lack of readily available market values, impacting the realized gains or losses[566].

Core Insights - MidCap Financial Investment Corporation reported a net investment income of $0.38 per share for Q3 2025, a slight decrease from $0.39 per share in Q2 2025 [1][4] - The net asset value (NAV) per share decreased to $14.66 as of September 30, 2025, down from $14.75 at the end of June 2025, reflecting a 0.6% decline [1][4] - The company declared a dividend of $0.38 per share, payable on December 23, 2025, to stockholders of record as of December 9, 2025 [2][4] Financial Performance - Total assets as of September 30, 2025, were $3.31 billion, down from $3.46 billion in June 2025 [8] - The investment portfolio at fair value decreased to $3.18 billion from $3.33 billion in the previous quarter [8] - The company's net leverage ratio was 1.35x as of September 30, 2025, compared to 1.44x in June 2025 [8] Investment Activity - New investment commitments during the quarter totaled $138 million, while gross fundings, excluding revolver fundings, amounted to $142 million [4][10] - The company received net repayments of approximately $97 million from Merx Aviation Finance, reducing its exposure to 3.3% of the total portfolio [3][4] - Direct origination revolver fundings totaled $33 million, with repayments of $30 million during the quarter [4] Capital Structure Enhancements - The company extended its senior secured revolving credit facility, reducing the applicable margin by 10 basis points and extending the final maturity date to October 1, 2030 [6][17] - The company upsized its Bethesda CLO 1, increasing its size from $402.4 million to $646.4 million, with a new senior AAA coupon of S+149 basis points [20][17] Portfolio Composition - As of September 30, 2025, 95% of the portfolio consisted of first lien secured debt, with a weighted average yield of 10.2% [23][24] - The portfolio included no unsecured debt and maintained a floating rate amount of $2.9 billion, representing 100% of the total [23][24] Operational Results - Net investment income for the quarter was $35.3 million, compared to $38.1 million in Q3 2024 [11] - The net increase in net assets resulting from operations was $27.5 million for the quarter [11] - The company did not repurchase any shares during the quarter, with a total of 16,069,776 shares repurchased since the program's inception [13]

Company Overview - MidCap Financial Investment Corporation (NASDAQ: MFIC) is a closed-end, externally managed, diversified management investment company that qualifies as a business development company (BDC) under the Investment Company Act of 1940 [3] - The company is externally managed by Apollo Investment Management, L.P., an affiliate of Apollo Global Management, Inc., which is a high-growth global alternative asset manager [3] - The investment objective of the company is to generate current income and, to a lesser extent, long-term capital appreciation [3] Investment Strategy - The company primarily invests in directly originated and privately negotiated first lien senior secured loans to privately held U.S. middle-market companies, defined as those with less than $75 million in EBITDA [3] - Additionally, the company may invest in other types of securities, including first lien unitranche, second lien senior secured, unsecured, subordinated, mezzanine loans, and equities in both private and public middle-market companies [3] Upcoming Events - The company will report results for the quarter ended September 30, 2025, after the closing of the Nasdaq Global Select Market on Thursday, November 6, 2025 [1] - A conference call will be hosted on Friday, November 7, 2025, at 8:30 a.m. Eastern Time, with participation details provided for interested parties [2]

Core Points - MidCap Financial Investment Corporation has amended and extended its senior secured, multi-currency revolving credit facility, reducing lender commitments to $1.610 billion, a decrease of $50 million [1] - The final maturity date of the facility has been extended to October 1, 2030, and the applicable margin has been reduced by 10 basis points to 177.5 basis points [1] - The commitment fee has also been reduced from 37.5 basis points to 32.5 basis points, while other material business terms remain substantially the same [1] Company Overview - MidCap Financial Investment Corporation is a closed-end, externally managed, diversified management investment company that operates as a business development company under the Investment Company Act of 1940 [4] - The company is managed by an affiliate of Apollo Global Management, Inc., focusing on generating current income and long-term capital appreciation [4] - It primarily invests in first lien senior secured loans to privately held U.S. middle-market companies, defined as those with less than $75 million in EBITDA [4]

Financial Data and Key Metrics Changes - Net investment income (NII) per share was $0.39 for the quarter, corresponding to an annualized return on equity (ROE) of 10.5% [11] - GAAP net income per share was $0.19, corresponding to an annualized ROE of 5.2% [11] - Net asset value (NAV) per share was $14.75, down 1.2% compared to the prior quarter [11] Business Line Data and Key Metrics Changes - MFIC made $262 million of new commitments across 29 transactions during the quarter [12] - The weighted average spread on new commitments was 538 basis points, with a slight increase compared to the prior quarter [12][23] - The weighted average net leverage on new commitments was 4.0 times, down from 4.2 times in the prior quarter [23] Market Data and Key Metrics Changes - The quarter began with heightened volatility due to U.S. tariffs, but market sentiment improved as tariffs were paused and trade deals were struck [20] - The labor market showed resilience with steady unemployment, and the Federal Reserve kept its policy rate unchanged [20] - The weighted average yield at cost of the direct origination portfolio was 10.5%, down from 10.7% in the prior quarter [35] Company Strategy and Development Direction - The company is focused on lending to the core middle market on a first lien senior secured basis, which offers attractive risk-adjusted returns [22] - The reduction in exposure to Merx is expected to provide capital for deployment into first lien middle market loans, which are believed to deliver higher returns [17] - The company intends to redeploy capital repaid from Merx to enhance earnings power and strengthen dividend coverage [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the M&A pipeline is building, with sponsors remaining active despite previous uncertainties [55] - The company expects a busy second half of the year with plenty of opportunities to deploy capital [55] - Management expressed confidence in covering the declared dividend of $0.38 per share through net investment income, despite potential base rate pressures [90] Other Important Information - The company reported total investment income of approximately $81.3 million, up 3.2% compared to the prior quarter [33] - Total principal debt outstanding was $2.05 billion, with total net assets standing at $1.3 billion [38] - The company received an $8.5 million pay down from Merx during the quarter [24] Q&A Session Summary Question: Can you clarify the structure of the remaining investment in Merx? - The remaining investment consists of four aircraft and a servicing platform, with 40% of the remaining exposure related to servicing contracts [43][44] Question: What are the expectations for investment activity in the second half of the year? - The company anticipates a busy second half with a growing M&A pipeline and active sponsors, which should provide ample opportunities for deployment [55] Question: How does the company view the current leverage levels? - The company is comfortable with the current leverage levels and expects them to remain within target ranges, especially with anticipated M&A activity [56][58] Question: What is the expected impact of the Merx transactions on NAV? - The Merx transactions are expected to result in a positive impact to NAV in the high single-digit per share range, specifically between $0.06 to $0.09 [94]

Financial Performance - Net investment income for the quarter ended June 30, 2025, was $364 million, or $039 per share[9] - Net realized and change in unrealized losses on investments for the quarter were $(180) million, or $(020) per share[9] - Net asset value per share decreased by 12% to $1475 as of the end of the quarter[9] Investment Portfolio - The total investment portfolio amounted to $333 billion, diversified across 249 portfolio companies and 51 industries[10] - Direct origination and other investments represented 92% of the total portfolio[10] - Non-accrual investments accounted for 20% of the total portfolio at fair value[10] - New investment commitments totaled $262 million across 31 companies, averaging $844 million per commitment[9] Portfolio Composition & Characteristics - The direct origination portfolio was primarily composed of first lien loans, representing 99% of the portfolio[10] - The direct origination portfolio was 100% floating rate[10] - Sponsored investments accounted for 90% of the direct origination portfolio[10] Funding and Leverage - Gross fundings for the quarter, excluding revolver fundings, totaled $254 million[9] - Net fundings, including revolvers, totaled $144 million for the quarter[9] - The company's net leverage ratio was 144x as of June 30, 2025[9]