Board authorized a $100 million stock buyback (bringing total repurchase capacity to $107.9 million); MFIC repurchased ~1.1 million shares at an average 18% discount for $12.9 million, generating roughly $0.03 per-share NAV accretion and saying it expects to deploy the authorization aggressively (possibly by late May) without materially increasing leverage.
Q4 results included net investment income of $0.39 per share and a GAAP net loss of $0.14 (or $0.10 ex one-time financing costs); NAV declined to $14.18 (down 3.3% sequentially) driven by several older-vintage investments and a portfolio net loss of about $45.3 million.
Management reset the quarterly dividend to $0.31 (payable Mar. 26, 2026) and expects it to be sustainable given lower funding costs and modeling despite base rates falling from ~5.4% to 3.8%; the portfolio remains large and senior‑secured at a $3.17 billion fair value with ~99% first‑lien in direct origination and modest software exposure (~11.4%) characterized as low‑LTV and cash‑pay.
MidCap Financial Investment (NASDAQ:MFIC) outlined fourth-quarter and full-year results for the period ended Dec. 31, 2025, highlighting continued credit work on several older-vintage investments, an expanded stock repurchase program, and a reduced quarterly dividend reflecting changes in base rates and market spreads.
For the December quarter, the business development company reported net investment income (NII) of $0.39 per share. The company posted a GAAP net loss of $0.14 per share, which included about $0.04 per share of one-time financing-related expenses tied to balance sheet actions during the quarter. Excluding those costs, GAAP net loss was $0.10 per share, management said.
Net asset value (NAV) ended the quarter at $14.18 per share, down 3.3% sequentially. CEO Tanner Powell attributed the decline primarily to a “handful” of investments, predominantly from 2022 and earlier vintages. Management said it continues to emphasize first-lien positions, cautious use of paid-in-kind (PIK) income, and limited software exposure as portfolio differentiators.
Management emphasized an increased focus on stock buybacks, arguing that repurchases at a steep discount to NAV are currently more attractive than new deployment. During the quarter, MFIC repurchased about 1.1 million shares at an average 18% discount to NAV, spending $12.9 million. The company said the activity generated roughly $0.03 per share of NAV accretion.
The board authorized a new $100 million stock repurchase plan, in addition to an existing authorization with approximately $7.9 million remaining capacity. In total, the company said it has $107.9 million available for repurchases. Powell said MFIC expects to use the authorization “aggressively,” including through a 10b5-1 trading plan to enable purchases during restricted trading windows. If the current discount and trading volumes persist, management said it anticipates fully utilizing the authorization by late May.
Management also said it does not expect repurchases to materially increase net leverage, citing visibility into expected repayments.
In the Q&A, Executive Chairman Howard Widra said the company would “consider everything” to address a persistent discount if it remains “unconnected to the value,” emphasizing a focus on delivering shareholder value “in whatever form we can get it to them.”
MFIC announced that, after reassessing longer-term earnings power amid base-rate changes and other factors, its board declared a quarterly dividend of $0.31 per share on Feb. 25, 2026, for stockholders of record as of March 10, 2026, payable March 26, 2026.
In response to a question on sustainability, management said its models indicate $0.31 is “appropriate and achievable.” The company pointed to the move in rates from about 5.4% to 3.8%, as well as lower spreads in the primary market, as factors affecting earnings power. Management also highlighted recent actions to reduce its cost of capital, including refinancing activities related to its revolving credit facility and its first CLO.
MFIC reported $141 million of new commitments across 26 transactions in the quarter, with a weighted average spread of 497 basis points and weighted average net leverage of 4x on new commitments. Net funded activity was +$25 million for the quarter.
At quarter-end, the portfolio’s fair value was $3.17 billion, invested in 247 companies across 46 industries. Management said 96% of the portfolio was direct origination and other investments, with 3% in Merx and 1% in liquid positions acquired in 2024 mergers. Within the direct origination portfolio, management said 99% was first lien and 92% was sponsor-backed (fair value basis). The average funded position was $12.8 million, and the median EBITDA was about $50 million. MFIC said about 94% of positions had one or more financial covenants on a cost basis.
President Ted McNulty said the weighted average yield at cost on the direct origination portfolio was 10.0% for the December quarter, down from 10.3% in the September quarter. The decrease was attributed to lower base rates, certain higher-yielding assets moving to non-accrual, and spread compression. The weighted average spread on directly originated corporate lending was 546 basis points at quarter-end, down 13 basis points from the prior quarter.
Management also addressed software exposure amid concerns about AI-driven disruption, stating that software represented 11.4% of the portfolio at fair value and was diversified across 29 borrowers. MFIC characterized these positions as 100% first lien, primarily cash-pay, with a low average loan-to-value of 32%. The company reported weighted average interest coverage of 2.3x and weighted average net leverage of 4.6x for the software portfolio.
In Q&A, Widra said the company’s software lending has historically skewed toward cash-generating businesses, influenced in part by the leverage constraints of MidCap Financial’s historical funding sources, and that MFIC generally avoided higher-leverage or ARR-only structures.
Investments on non-accrual declined to 2.6% of the portfolio at fair value, down from 3.1% the prior quarter. Management said two companies returned to accrual status during the quarter, including LendingPoint after a restructuring. Compass Health was also restored and subsequently repaid following a sale in February. MFIC recognized a net gain of about $1 million on Compass Health in the December quarter and said an additional gain of about $0.5 million is expected to be recorded in the March quarter.
MFIC placed Bird Rides, Banner Solutions, and Renovo on non-accrual during the quarter, and management said those three names accounted for roughly 36% of the total net loss for the quarter.
CFO Kenneth Seifert said total investment income was approximately $78.4 million, down $4.2 million (or 5.1%) from the prior quarter, driven largely by lower interest income from decreased base rates, new non-accruals, and spread compression. Net expenses were $42.4 million, down $4.9 million (or 10.4%) from the prior quarter, largely due to the absence of incentive fees under the total return hurdle and lower interest expense, partially offset by higher administrative services.
The portfolio generated a net loss of $45.3 million, or $0.49 per share. Seifert cited negative contributors including LendingPoint, Renovo, Amperity, Bird Rides, New Era, and Banner Solutions, while positive contributors included Merx and Compass Health.
MFIC also discussed October refinancing actions, including extending and repricing its revolving credit facility and upsizing and repricing its first CLO. The company recorded a realized loss of about $3.4 million, or $0.04 per share, related to these financing activities. The cost of debt for the quarter declined to 5.95% from 6.37% in the prior quarter, driven by the refinancing and lower base rates.
On the balance sheet, the company ended the quarter with $2.00 billion of principal debt outstanding and total net assets of $1.31 billion. Net leverage ended the quarter at 1.45x.
MidCap Financial Investment Corporation (NASDAQ: MFIC) is a business development company that provides financing solutions to middle-market companies across the United States. The firm specializes in direct lending and asset-based financing, offering a range of debt instruments designed to support working capital needs, equipment acquisitions, lease financing and corporate recapitalizations. Its focus on senior secured loans, unitranche structures and equipment financings positions it to serve clients in sectors such as manufacturing, healthcare, transportation and energy.
Through its lending platform, MidCap Financial Investment Corporation partners with privately held and sponsor-backed companies that typically generate annual revenues between $25 million and $500 million.
