Saratoga Investment Corp. Reports Net Decrease in Assets of $6.7 Million for Quarter Ended August 31, 2026

Saratoga Investment Corp. reported a net decrease in net assets of $6.7 million, or $0.41 per share, for the three months ended August 31, 2026. This contrasts with a net increase in net assets of $13.3 million, or $0.84 per share, for the same period in the prior fiscal year. For the six months ended August 31, 2026, the company experienced a net decrease in net assets of $13.6 million, or $0.84 per share, compared to a net increase of $27.2 million, or $1.75 per share, for the six months ended August 31, 2025. Total assets grew to $1.26 billion as of August 31, 2026, up from $1.14 billion as of February 28, 2026, primarily driven by an increase in investments at fair value.

The company's total investment income for the three months ended August 31, 2026, was $31.2 million, a slight increase from $30.6 million in the prior year's comparable period. However, for the six months ended August 31, 2026, total investment income decreased by 1.6% to $61.9 million from $62.9 million in the prior year. This decrease was primarily due to a reduction in interest income from cash and cash equivalents, reflecting lower average balances, and a decrease in management fee income from the Saratoga CLO, which is in winddown. Structuring and advisory fee income saw an increase, contributing to the overall stability of investment income for the three-month period.

Operating expenses for the three months ended August 31, 2026, increased by 10.8% to $23.9 million compared to $21.5 million in the prior year period. This rise was largely driven by a 13.7% increase in interest and debt financing expenses, attributed to higher average outstanding debt levels. Base management fees also increased by 15.8%, reflecting the growth in the company's total assets. Conversely, incentive management fees decreased by 19.5% for the three-month period, primarily due to lower net investment income.

During the six months ended August 31, 2026, the company invested $155.3 million in new and existing portfolio companies, with $87.5 million in aggregate amount of exits and repayments. This resulted in net investments of $67.8 million for the period. The company's portfolio composition at August 31, 2026, consisted of 81.5% first lien term loans, a slight decrease from 82.1% at February 28, 2026. Equity interests represented 7.1% of the portfolio at August 31, 2026, down from 7.6% at February 28, 2026.

Subsequent to the quarter ended August 31, 2026, Saratoga Investment Corp. redeemed $105.5 million in aggregate principal amount of its outstanding 6.00% 2027 Notes. Additionally, the company received notification that the SBA increased the individual leverage limit for SBIC III LP to $250.0 million, providing an additional $75.0 million in long-term capital. The company also completed the sixth refinancing of the Saratoga CLO, extending its reinvestment period and legal maturity. Furthermore, the underwriters exercised their overallotment option for an additional $12.8 million in 8.00% 2031 Notes, and the company issued an additional $23.1 million of these notes.