RWAYZ — Runway Growth Finance Corp. 8.00% Notes due 2027

Summary of RWAYZ Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Total Investment Income: $30 million, down from $36.7 million in Q4 2024.
• Net Investment Income (NII): $11.6 million, decreased from $15.7 million in Q4 2024.
• NII per Share: $0.32, with a base dividend of $0.33 per share.
• Fair Value of Investment Portfolio: $927.4 million, a 2% decline from $946 million in 2024.
• Weighted Average Portfolio Risk Rating: Increased to 2.45 (on a scale of 1-5).
• Debt Portfolio Yield: 14.2%, down from 16.8% quarter-over-quarter.
• Net Assets: $484.9 million, down from $489.5 million at the end of 2024.
• NAV per Share: $13.42, a decrease of 1% from $13.55 in 2024.
• Leverage Ratio: 0.90x, with asset coverage at 2.11x.

2. Strategic Updates and Business Highlights

• Completed seven investments totaling $42.9 million in Q4, focusing on technology, healthcare, and consumer sectors.
• Announced the pending acquisition of SWK Holdings, expected to close in early April 2026, which aims to diversify the portfolio and enhance capabilities in healthcare and life sciences.
• Emphasized a disciplined investment approach, focusing on first-lien senior secured loans to mitigate risk.
• Noted a strong pipeline for 2026, bolstered by BC Partners and the SWK acquisition, with expectations for ongoing deal flow.

3. Forward Guidance and Outlook

• Anticipated stronger origination activity in 2026 compared to the previous year, with a focus on maintaining a conservative underwriting approach.
• Expected mid-single-digit NII accretion from the SWK acquisition, with a target leverage ratio of 1.2x to 1.3x post-acquisition.
• First-quarter 2026 earnings may experience softness due to a one-time charge from debt redemptions.

4. Bad News, Challenges, or Points of Concern

• Declining metrics in total investment income and NII compared to the previous year, raising concerns about profitability.
• Prepayment fee income returned to normalized levels, contributing to the decline in NII.
• One loan on nonaccrual status (Domingo Healthcare), representing only 0.25% of the total investment portfolio, but still a point of concern.
• Competitive pressures in the market, particularly in software and consumer sectors, may lead to aggressive terms that could impact underwriting discipline.

5. Notable Q&A Insights

• Management highlighted a stronger pipeline for new investments, particularly from BC Partners, with expectations for at least one deal per quarter.
• Discussion on the SWK transaction revealed 13 loans with a fair value of around $235 million expected to transfer, with an aggregate yield of about 14%.
• Concerns were raised regarding the software portfolio, but management expressed confidence in its performance and ongoing monitoring.
• The stock repurchase program was paused due to the pending acquisition, with plans to revisit it post-transaction.

Overall, while RWAYZ demonstrated solid strategic initiatives and a strong pipeline for future growth, the decline in key financial metrics and the competitive landscape present challenges that management is addressing through disciplined investment practices and strategic acquisitions.