Horizon Technology Finance Corporation Reports Q2 2026 Financial Results with Increased Investment Income

Horizon Technology Finance Corporation reported its financial results for the second quarter of 2026, revealing a total investment income of $25.0 million, a slight increase of 2.1% from $24.5 million in the same period last year. The company’s net investment income before excise tax was $7.7 million, down from $11.8 million in the prior year, leading to a net investment income of $7.4 million compared to $11.4 million in Q2 2025. The net decrease in net assets resulting from operations was $(37.3) million, a significant decline from $(20.8) million in the previous year, primarily due to increased unrealized depreciation on investments.

Total expenses for the quarter rose to $17.4 million, up 36.9% from $12.7 million in Q2 2025. This increase was attributed to transaction costs related to the company's merger with Monroe Capital Corporation, which accounted for $4.4 million of the total expenses. Interest expense decreased slightly to $7.8 million, reflecting a reduction in average borrowings. The company’s average gross assets less cash increased to $724.2 million, compared to $677.3 million in the prior year.

In terms of strategic developments, Horizon completed its merger with Monroe Capital Corporation on April 14, 2026, which involved the issuance of 20.4 million shares of common stock and approximately $141.3 million in cash. This merger is expected to enhance the company’s investment strategy and expand its portfolio. As of June 30, 2026, the company’s total investments at fair value amounted to $676.7 million, an increase from $647.2 million at the end of 2025. The portfolio remains heavily weighted towards debt investments, which constituted 95.8% of the total portfolio.

Operationally, Horizon's investment strategy focuses on secured debt investments in development-stage companies across technology, life sciences, healthcare information, and sustainability sectors. The company reported a weighted average credit rating of 2.3 on a 1-to-5 scale for its debt investments, indicating an acceptable level of risk. The company also noted a significant increase in payment-in-kind (PIK) interest income, which rose to $1.6 million for the quarter, reflecting a growing number of earning assets with PIK features.

Looking ahead, Horizon Technology Finance Corporation anticipates continued growth in its investment portfolio, supported by its recent merger and ongoing capital commitments. The company has committed to invest up to $87.5 million in the newly formed RoHo Capital Opportunity Fund LLC, aimed at providing growth capital financing solutions to small and micro-cap public companies. The company remains focused on maintaining compliance with regulatory requirements as a business development company (BDC) and regulated investment company (RIC), ensuring it meets its distribution and asset coverage obligations.