Runway Growth Finance Corp. Q4 FY2025 earnings call

• David mentioned fourth quarter total investment income of $30M and net investment income of $11.6M, completed seven investments in Q4 totaling $42.9M funded. 2025 was dynamic with market events, company remains disciplined in investment process. Executing initiatives like enhancing portfolio risk profile, expanding financing solutions, maximizing value of existing commitments. Part of BC Partners Credit ecosystem, made progress on objectives, announced acquisition of SWK Holdings expected to close in early April, which will diversify portfolio, especially in healthcare and life sciences. First quarter originations activity encouraging, pipeline stronger than last year. - Greg recapped Q4 portfolio activity: seven investments totaling $42.9M funded, including investments in mobility, consumer products, Shield Therapeutics, and follow-on investments. Year ahead focus on efficiently scaling portfolio, strong funnel from BC Partners, SWK acquisition additive to sourcing, especially in healthcare. - Tom reviewed Q4 financials: total investment income and net investment income decreased from prior quarter, weighted average portfolio risk rating increased, total investment portfolio fair value decreased, debt portfolio yield decreased, operating expenses decreased, net realized loss on investments decreased, few repayments and scheduled amortization, only one loan on non-accrual status. Update on SWK acquisition: expected to close in early April, will enhance portfolio, reduce average position size, enhance financial profile, expand shareholder base, generate net investment income accretion, support ROE expansion and dividend coverage. Capital allocation: not able to utilize stock repurchase program during quarter due to SWK acquisition, board declared first quarter 2026 distribution of 33 cents per share

In the fourth quarter, Runway delivered total investment income of $30 million and net investment income of $11.6 million. Total investment portfolio had a fair value of $927.4 million, a decrease of 2% from $946 million in the third quarter. Weighted average portfolio risk rating increased to 2.45 in Q4 2025 compared to 2.42 in Q3 2025. Debt portfolio generated a dollar weighted average annualized yield of 14.2% in Q4 2025, decreasing from 16.8% quarter over quarter. Net investment income per share in Q4 was $0.32. Base dividend in Q4 was $0.33 per share, and spillover income at end of year was approximately $0.65 per share. As of Dec 31, 2025, net assets were $484.9 million, NAV per share was $13.42, leverage ratio was 0.9 and asset coverage was 2.11 times. Unfunded commitments were $145.5 million. Post-acquisition of SWK, expected to reduce average position size to 23.5 million or 2.2% of portfolio, compare to 30.3 million or 3.1% before BC Partners transaction

• Expect a two-cent headwind in first quarter related to one-time charge from full redemption of 8% notes and partial redemption of 7.5% notes. - Anticipate the SWK transaction to close in early April, which will have benefits like diversifying portfolio, enhancing financial profile, etc. - Board declared regular distribution for first quarter of 2026 of 33 cents per share, confident earnings power aligned with distribution level on a four-year basis. - Expect first distribution from CADMA JV in Q2

• Forward-looking statements subject to uncertainties and factors causing actual results to differ, including market conditions from interest rate uncertainty, changing economic conditions, etc. - Modest delay in SWK transaction timing will contribute to softness in Q1 2026 earnings. - Fluctuation in earnings quarter to quarter based on timing of SWK deal and other factors. - Difficulty in putting prepayment money to work in smaller pieces given competitive environment and choosiness in transactions

Q: David, in your prepared comments, you noted that the pipeline is stronger than it was at this point last year. I'm wondering if you or Greg, if you wanted to weigh in as well to just talk about maybe how it looks today in terms of new versus add-on opportunity, if there's any particular industries that are more heavily weighted at this point. And then I think you mentioned also in the back half of the year that you could see some additional growing or growth from the benefits of BC partners and SWK and whether you would think that broadens, you know, kind of the mix. I'm wondering if you could update us as to what the balance of their loans and the number of loans you expect to have coming over on April 6th is going to be.

A: Sure. You know, subject to a little bit of modification, there'll be 13 loans with a fair value of around $235 million. There's equity in addition to that. So there's an equity portfolio there. of some stock positions, warrants, and there are a couple of remaining royalties that we'll come across. Those are generally not yielding right now, so we're yielding very low. So any aggregate yield on that portfolio, the total portfolio is about 14%. The debt-only portfolio is about 16%. Okay. Thank you for that. Greg, when you were answering the last question, at least to me, you were breaking up quite a bit. I don't know if you're on a speaker or what, but I do have a question for you. If I was a member of the media, I would just ask you when are you going to mark the software portfolio at zero, right? Because that's what the media expectation is at this point in time. But I did want to ask, you have had one loan at the end of the third quarter that was marked at a reasonable discount to par, I think around 82%. And when I read the Las Vegas Sun, I see that Circadence closed a new investment round and is talking about strong revenue growth. And so I was wondering if you could update us on that particular credit because it seems as though things may have turned for the better.

A: Yeah, and hopefully this is better sound-wise. I don't know if you need me to repeat anything, but as you pointed out, successfully close on an equity round, as well as sign a substantial contract with the Defense Department. Change in combination will lead to a increase in performance for them. So it is one that we do continue to watch. All right, great. Thank you for taking my questions. Thank you. As a reminder, to ask a question at this time, please press star 11 on your touchstone telephone. Our next question comes from the line of Richard Shane with JP Morgan. Your line is now open. Hey, guys. Thanks for taking my questions this afternoon. First, in terms of, and actually this is both related, when you guys announced the transaction, you announced the SWK transaction, you announced an accretion level from an NII or share of perspective, I assume. Given the movements in the stock price and the relative performance, um how should we be thinking about that and are there any caps or collars on the equity component that you're providing the 75 million dollars uh well thanks richard thanks for the question and welcome to our uh to your first earnings call uh with us we're glad to have you as part of the coverage team uh so the amount of equity is set at 75.5 million that won't change the number of shares will change modestly based on the calculation of NAV. There'll still be meaningful accretion. There is some accounting that happens that actually increases the NII contribution as the stock declines. It's kind of counterintuitive, but it in effect increases the discount at which we're buying the portfolio. And as I said, it's fixed in terms of the dollar amount. The share count changes based on the NAV. Got it. But presumably that means that the deal becomes more dilutive because you are giving more shares in order to provide the $75 million of stock compensation or consideration. That's correct. But we're talking about significant change in terms of the change in NAV. If you look at the 1231 NAV versus the 930 NAV, it's one percentage. So it's not a meaningful amount, and at least at the moment, the preliminary calculations are that that will largely be offset by the increase in the in the discount that we're purchasing at because of the decline in the stock price. Got it. Okay. Very helpful. And then, look, you guys have a history of repurchasing shares. You didn't repurchase shares this quarter. You mentioned the fact that you do see that as an attractive opportunity. I am curious if one of the considerations in terms of just forestalling that during the fourth quarter, was the impact of the acquisition, and is that something that post-acquisition lifts and you guys will start to go back to the market and repurchasing shares again?

A: We've done that in the past, and that is our plan to discuss that with the board. If history repeats itself, I would think the board would view it and has consistently with the management team that it's a good use of capital. But we were not legally available with the pending acquisition. When we were under LOI, we could not use the stock repurchase program. When we had the N-14 pending, we could not use the stock repurchase program. In general, the first time we'd be able to do it would be two days after the closing of However, that's in our blackout period for Q1. So the first time that we can be back in the market is probably the second week of May. And so as we look at capital allocation, it's a balancing act between new deals and the long-term core earnings power that that brings to the table versus the immediate accretion from buying at such a discount. And so we... we recognize the financial impact to our shareholders on that. Got it. Okay, great. That's very helpful, and that was kind of what I was trying to understand. And then very briefly, last question, what is remaining under your repurchase authorization from before?

A: Effectively, there's a number, but we can't use it. So we'll revisit the whole number, you know, come – come the end of April, early May when we have our board meeting and we'll have much better details on the portfolio. I appreciate that. A lot of moving parts for the new guy. I appreciate it very much, guys. Thank you. No, that's all right. We appreciate the questions. And again, welcome. We're glad to have you on board. Thanks. Fun to be here. Thank you. Our next question comes from the line of Sean Paul Adams with B Raleigh Securities. Your line is now open. Hey, guys. On the merger, I understand that you guys have proxy deadlines in the shareholder meetings, but, you know, was there any reason that, you know, kind of prevented, you know, the mail outs from going out a little bit sooner in the quarter?

A: Yeah, nothing to do with us. So, technically, the SEC has 30 days to respond to your filing, and we filed November 19th, which would have meant a December 19th date for the initial comments back. Unfortunately, with the shutdown and the backlog that the SEC had, and this was not a typical investment company to investment company transaction. It was the acquisition by an investment company of an operating company. So I would say know there was a little more to digest for the sec but the reality is it took 72 days to get the majority of the comments and 77 days for the last comments they weren't particularly difficult and we you know once we had them we turned them and filed as quickly as possible but there are absolutely no underlying business issues uh it was really just uh getting through the the queue at the sec and and once they I have to say, once they gave us their comments and they recognized that we had a deadline embedded into the merger agreement, they were very good to work with and very attentive. Got it. Appreciate the call. Thank you. And I'm currently showing no further questions at this time. I'd now like to call back over to David Spring for closing remarks. Thank you, operator, and thank you all for joining us today. We look forward to discussing our first quarter of 2026 financial results with you in May. This concludes today's conference. Thank you for your participation. You may now disconnect.