Horizon Technology Finance Corporation Q3 FY2025 earnings call

Merger Update: Announced in August the merger of MRCC and HRZN in a NAV-for-NAV share exchange, expected to complete in early 2026. Monroe Capital will provide support post-merger. ### Financial Results: Net investment income was $0.32 per share. NAV per share grew 5% to $7.12. Board declared monthly distributions of $0.11 per share through March 2026. ### Balance Sheet: Strengthened by raising equity via at-the-market program and issuing $40 million of 5.5% unsecured convertible notes due 2030. ### Portfolio Activities: Funded $15 million in debt investments, acquired a venture debt portfolio, had 6 loan prepayments totaling $50 million, and achieved favorable outcomes with challenged portfolio companies. ### Venture Lending Market: Market is warming up with VC investments, exit markets opening, though life sciences have valuation issues. Horizon's pipeline of larger venture debt transactions is growing.

For the third quarter, Horizon generated net investment income of $0.32 per share. NAV per share grew 5% to $7.12. The portfolio yield on debt investments was at or near the top of the BDC industry. Net investment income per share was $0.32, NAV per share was $7.12 (a 5% increase), and the portfolio yield on debt investments was among the highest in the BDC industry.

Distributions: Board declared regular monthly distributions of $0.11 per share through March 2026. ### Portfolio Growth: Expect to grow portfolio in future quarters, with pipeline of larger venture debt transactions growing. ### Leverage: Potential new investment capacity as of September 30 was $460 million, aiming to return to target leverage of 1.2 to 1.3x net of cash.

Uncertainties: Forward-looking statements subject to inherent uncertainties in predicting future results. Factors from SEC filings, including those in Form 10-K for 2024, could cause actual results to differ from projections.

Q: Cory Johnson asked about VC market payoffs trend into 2026 and if government shutdown impacts payouts.

A: Paul Seitz said government shutdown likely not impacting payoffs, expect payoffs to revert to historical standard, exit markets heating up but in wait-and-see.

Q: Paul Johnson asked about portfolio yield sustainability.

A: Daniel Trolio said historical portfolio yield averaged 14.5% to 15%, onboarding yield around 12% to 12.5% going forward.

Q: Christopher Nolan asked about focus on larger credits post-MRCC deal and ROE.

A: Daniel Trolio said focus on larger credits won't dramatically change yields, no specific targeted ROE on new capital from Monroe deal