Hercules Capital Reports Financial Performance for Year Ended December 31, 2024

Hercules Capital, Inc. (HTGC), a specialty finance company focused on providing senior secured loans to high-growth technology and life sciences companies, reported its financial performance for the year ended December 31, 2024. The company's total investment portfolio reached $3.66 billion, comprised of $3.49 billion in debt, $129 million in equity, and $30.5 million in warrants. This represents an increase from the $3.25 billion portfolio at the end of 2023. For the year ended December 31, 2024, HTGC reported total investment income of $493.6 million, compared to $460.7 million in 2023. Net investment income was $325.8 million in 2024, down from $337.5 million in 2023, primarily due to a net realized loss of $31.7 million and a net change in unrealized depreciation of $31.2 million. The company's weighted average investment grading was 2.26 as of December 31, 2024.

Significant changes compared to the previous fiscal year include a decrease in net investment income, driven by realized losses and unrealized depreciation. These losses stemmed from write-offs of debt investments in several portfolio companies, partially offset by realized gains from the sale of equity and warrant positions in others. The company also experienced a decrease in its weighted average core yield on debt investments, from 14.3% in 2023 to 12.9% in 2024. Conversely, the company saw an increase in total investment income, primarily due to higher weighted average principal outstanding and dividend income from its Adviser Subsidiary. Early principal repayments on debt investments totaled approximately $922 million during 2024.

During the year, HTGC originated $2.13 billion in net investment commitments, down from $1.58 billion in 2023. This includes $1.41 billion in net debt fundings, compared to $1.24 billion in 2023. The company also reported $448.5 million in total unfunded contractual commitments as of December 31, 2024. HTGC's employee headcount exceeded 100 professionals across eight global offices as of December 31, 2024, with over 50 employees in the investment team. The company also formed Hercules Capital Management LLC and Hercules Adviser LLC in 2020, with the Adviser Subsidiary managing approximately $4.8 billion in assets as of December 31, 2024.

Key operational developments include the continued focus on investments in technology and life sciences companies, with a significant portion of the portfolio concentrated in software, drug discovery and development, and healthcare services. The company's investment process involves origination, underwriting, documentation, and loan and compliance administration. HTGC utilizes an investment grading system to assess risk and monitors its portfolio companies closely. The company also highlighted its commitment to corporate social responsibility, including diversity, equity, and inclusion initiatives.

Looking ahead, HTGC acknowledged several risk factors, including competition, dependence on key personnel, concentration in specific industries, and the illiquidity of its investments. The company also noted the impact of macroeconomic factors, such as interest rate changes and global economic conditions, on its financial performance and outlook. The company stated that it intends to continue its investment strategy, focusing on generating current income from debt investments and capital appreciation from warrant and equity investments. The company also noted that it intends to continue to pay distributions to its stockholders, subject to its earnings, financial condition, and compliance with regulatory requirements.