Core Viewpoint - MidCap Financial Investment Corporation is set to report its financial results for the quarter ending December 31, 2025, on February 26, 2026, after market close [1] Group 1: Financial Reporting - The company will host a conference call on February 27, 2026, at 8:30 a.m. Eastern Time for interested parties to discuss the financial results [2] - Participants can join the call by dialing specific numbers provided for both domestic and international callers, and a simultaneous webcast will be available [2] Group 2: Company Overview - MidCap Financial Investment Corporation is a closed-end, externally managed investment company classified as a business development company under the Investment Company Act of 1940 [3] - The company aims to generate current income and long-term capital appreciation, primarily investing in first lien senior secured loans to U.S. middle-market companies with less than $75 million in EBITDA [3] - The company is externally managed by Apollo Investment Management, L.P., an affiliate of Apollo Global Management, Inc. [3]

Core Viewpoint - KBRA assigns an issuer rating of A-, a senior unsecured debt rating of A-, and a junior subordinated debt rating of BBB to MidCap Financial Issuer Trust, indicating a strong credit profile for the company [1] Group 1: Ratings and Financial Structure - MidCap Financial Issuer Trust is a wholly-owned subsidiary of MidCap FinCo Intermediate LLC, which serves as the guarantor of the debt [1] - The company specializes in providing senior secured debt solutions to various industries [1] - The ratings outlook reflects the company's financial stability and operational capabilities [1]

Core Viewpoint - MidCap Financial has announced the signing of approximately $3.1 billion in senior unsecured notes and junior subordinated notes, marking a transformative milestone that enhances its balance sheet strength and financial flexibility, with an expected improvement in its Senior Unsecured credit rating to investment grade status [1][2]. Group 1: Financial Impact - The issuance of notes is expected to significantly improve MidCap's credit profile, expanding access to capital markets and reinforcing its ability to serve around 600 borrowers [2]. - The transaction diversifies funding sources, extends liability duration, and is anticipated to lower the cost of capital over time, enhancing competitive positioning and supporting growth across lending platforms [2][3]. Group 2: Management Statements - David Moore, Co-Founder and Vice Chairman, stated that this transaction fundamentally reshapes the balance sheet and accelerates the evolution into an investment-grade institution, validating the business model and long-term growth strategy [3]. - CEO Josh Groman emphasized that this inaugural investment-grade financing will fuel continued expansion as a leading diversified private credit platform, highlighting the team's achievements leading to this milestone [3]. Group 3: Financial Policies - MidCap is committed to a conservative financial policy, targeting an adjusted net leverage ratio below 2.5x, net secured debt to total assets below 30%, and net senior unsecured leverage below 1.5x, while maintaining at least $2 billion in liquidity [4]. Group 4: Company Overview - MidCap Financial is a middle-market focused specialty finance firm providing senior debt solutions across all industries, managing over $62 billion in commitments as of December 31, 2025 [5]. - The firm is managed by Apollo Capital Management, a subsidiary of Apollo Global Management, which had approximately $908 billion in assets under management as of September 30, 2025 [5].

Leadership Changes - MidCap Financial announced key leadership appointments effective January 1, 2026, with Josh Groman succeeding Steve Curwin as CEO and Randy Feldner succeeding David Moore as CFO [1][2] - Curwin and Moore will remain with the company as Co-Executive Chairman and Vice Chairman, respectively, to support the new leadership team [2][4] Leadership Experience - Josh Groman has nearly 30 years of financial services experience, including two decades with MidCap, and has significantly expanded his leadership responsibilities in credit, loan origination, and portfolio management over the past four years [2][3] - Randy Feldner has been with MidCap since its inception, overseeing loan operations as commitments grew from under $1 billion to nearly $60 billion, and has taken on broader leadership roles as part of succession planning [3] Company Overview - MidCap Financial is a middle-market focused specialty finance firm providing senior debt solutions across all industries, managing over $60 billion in commitments as of September 30, 2025 [5] - The firm is managed by Apollo Capital Management, a subsidiary of Apollo Global Management, which had approximately $908 billion in assets under management as of the same date [5]

Financial Data and Key Metrics Changes - Net investment income (NII) per share was $0.38 for Q3 2025, corresponding to an annualized return on equity (ROE) of 10.3% [6] - GAAP net income per share was $0.29 for the quarter, corresponding to an annualized ROE of 8% [7] - Net asset value (NAV) per share was $14.66 at the end of September, down 0.6% compared to the prior quarter [7] - Total investment income for the September quarter was approximately $82.6 million, up $1.3 million, or 1.6% compared to the prior quarter [25] Business Line Data and Key Metrics Changes - MFIC made $138 million of new commitments across 21 transactions during the September quarter [7] - The weighted average spread on the directly originated corporate lending portfolio was 559 basis points, down 9 basis points compared to the end of June [21] - The weighted average yield at cost of the directly originated lending portfolio was 10.3% for the September quarter, down from 10.5% for the June quarter [25][21] Market Data and Key Metrics Changes - The U.S. economy has remained resilient, easing recession concerns, although inflation remains elevated [16] - The Federal Reserve cut interest rates by 25 basis points in both September and October [16] - There is an increase in sponsor M&A activity due to reduced volatility from tariffs and a more stable financing environment [16][17] Company Strategy and Development Direction - MFIC's strong position is a competitive advantage, with over half of new commitments made to existing portfolio companies [8] - The company aims to maintain a disciplined underwriting approach despite competitive pressures [17] - MFIC is focused on building a portfolio of predominantly first lien loans to sponsor-backed companies [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the increase in M&A activity is expected to continue into 2026, driven by private equity firms needing to deploy capital [42] - The company is actively working on initiatives to offset the impact of declining base rates on net investment income [14] - Management expressed confidence in the ability to navigate the current market environment and maintain portfolio quality [10][22] Other Important Information - The board declared a quarterly dividend of $0.38 per share, payable on December 23, 2025 [13] - The company has no exposure to certain troubled companies, indicating a focus on portfolio health [19] Q&A Session Summary Question: What is driving the increase in non-accruals? - Management indicated that there is no common theme among the companies that went on non-accrual, with issues being idiosyncratic [35] Question: Is the increase in M&A activity sustainable through 2026? - Management believes ongoing demand for M&A will continue due to private equity firms needing to deploy capital and a more stable financing environment [42] Question: How is the company addressing the impact of lower base rates on dividends? - Management is evaluating the timing of initiatives to offset lower base rates and is committed to maintaining the current dividend level while monitoring the situation [62]

Financial Data and Key Metrics Changes - Net investment income (NII) per share for Q3 2025 was $0.38, corresponding to an annualized return on equity (ROE) of 10.3% [5][26] - GAAP net income per share was $0.29, corresponding to an annualized ROE of 8% [6][26] - Net asset value (NAV) per share decreased by 0.6% to $14.66 compared to the prior quarter [6] - Total investment income for the quarter was approximately $82.6 million, up 1.6% from the previous quarter [24] Business Line Data and Key Metrics Changes - New commitments totaled $138 million across 21 transactions during the quarter [6][16] - The weighted average spread on new commitments was 521 basis points [16] - The weighted average yield at cost of the directly originated lending portfolio decreased to 10.3% from 10.5% [24][19] Market Data and Key Metrics Changes - The U.S. economy showed resilience, easing recession concerns, but inflation remained elevated [15] - The Federal Reserve cut interest rates by 25 basis points in both September and October [15] - Increased sponsor M&A activity was noted, driven by private equity firms needing to deploy capital [15][41] Company Strategy and Development Direction - The company aims to leverage its strong position in the middle market to source attractive investment opportunities [7][9] - The focus remains on maintaining a diversified portfolio with a significant portion in first lien loans [9][18] - The company is actively working on initiatives to offset the impact of declining base rates on net investment income [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about ongoing M&A activity due to improved market conditions and reduced volatility from tariffs [41] - The company anticipates a positive impact on portfolio company credit quality if base rates decline as expected [20] - Management is focused on a measured approach to deploying capital while maintaining portfolio granularity [46] Other Important Information - The board declared a quarterly dividend of $0.38 per share, payable on December 23, 2025 [11] - The company experienced an increase in non-accrual investments, which now represent 3.1% of the portfolio at fair value [22] Q&A Session Summary Question: What drove the increase in non-accruals? - Management noted that there was no common theme among the companies that went on non-accrual, with some impacted by tariffs and others by weakened consumer sentiment [32][33] Question: Is the increase in M&A activity sustainable through 2026? - Management indicated that ongoing demand for M&A activity is expected due to private equity firms needing to deploy capital and improved market conditions [40][41] Question: How is the company evaluating the timing of mitigating actions against lower base rates? - Management emphasized a deliberate approach to deployment, balancing the need to return to target leverage with the opportunity to create a granular portfolio [46] Question: What are the latest thoughts on dividend coverage given the current rate outlook? - Management confirmed that the dividend remains intact, with several levers in place to mitigate the effects of lower base rates [60]

Financial Performance - Net investment income for the quarter ended September 30, 2025, was $353 million, or $038 per share[9] - Net realized and change in unrealized gains (losses) on investments for the quarter ended September 30, 2025, were $(79) million, or $(008) per share[9] - Net asset value per share as of the end of the quarter was $1466, a decrease of 06% compared to June 30, 2025[9] Investment Portfolio - New investment commitments made during the quarter totaled $138 million across 21 companies for an average new commitment of $66 million[9] - Gross fundings for the quarter, excluding revolver fundings, totaled $142 million[9] - The company received a net repayment of approximately $97 million from Merx Aviation Finance, LLC during the September quarter, reducing its exposure to approximately 33% of the total portfolio, at fair value[9] - The total investment portfolio was $318 billion, with 95% in direct origination and other investments, 3% in Merx Aviation, and 2% in acquired non-direct origination assets[10, 11] - Non-accrual investments represented 31% of the total portfolio at fair value[10] Portfolio Characteristics - The direct origination portfolio had a weighted average yield of 103% and a weighted average spread over SOFR of 559 bps[10] - First lien investments comprised 98% of the direct origination portfolio, which was 100% floating rate and 91% sponsored[10] - 93% of the direct origination portfolio was pursuant to co-investment order[10] Debt and Funding - Net leverage was 135x as of September 30, 2025[9] - Lender commitments under the Amended Senior Secured Facility decreased from $1660 billion to $1610 billion[8] - The weighted average annualized interest cost on total debt obligations was 6368%[32]

Core Insights - MidCap Financial Investment (MFIC) reported quarterly earnings of $0.38 per share, matching the Zacks Consensus Estimate, but down from $0.44 per share a year ago [1] - The company posted revenues of $82.58 million for the quarter ended September 2025, slightly missing the Zacks Consensus Estimate by 0.79%, and showing a year-over-year increase from $82.14 million [2] - MidCap Financial shares have declined approximately 9.3% year-to-date, contrasting with the S&P 500's gain of 15.6% [3] Earnings Outlook - The future performance of MidCap Financial's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $82.51 million, and for the current fiscal year, it is $1.51 on revenues of $325.69 million [7] Industry Context - The Financial - Miscellaneous Services industry, to which MidCap Financial belongs, is currently ranked in the top 35% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

Financial Performance - Net investment income per share for the quarter was $0.38, a decrease of 2.6% from $0.39 for the quarter ended June 30, 2025[1]. - Net investment income for the three months ended September 30, 2025, was $35,307,000, compared to $38,135,000 for the same period in 2024, indicating a decrease of 4.8%[28]. - The company reported total investment income of $82,576,000 for the three months ended September 30, 2025, slightly up from $82,138,000 in the prior year[28]. - The net realized and change in unrealized losses for the nine months ended September 30, 2025, amounted to $(30,086,000), compared to $(21,459,000) for the same period in 2024[28]. - Management fees increased to $6,069,000 for the three months ended September 30, 2025, compared to $4,428,000 in the same period of 2024, reflecting a rise of 37.1%[28]. Asset and Investment Overview - Net asset value per share as of September 30, 2025, was $14.66, down 0.6% from $14.75 as of June 30, 2025[1]. - The company's net assets decreased to $1,367,920,000 as of September 30, 2025, from $1,404,646,000 at the end of 2024, a decline of approximately 2.6%[26]. - Total assets as of September 30, 2025, were $3.31 billion, down from $3.46 billion as of June 30, 2025[7]. - Total assets increased to $3,309,494,000 from $3,190,950,000 as of December 31, 2024, reflecting a growth of approximately 3.7%[26]. - The company continues to focus on generating current income through investments in first lien senior secured loans to U.S. middle-market companies[32]. - As of September 30, 2025, the portfolio composition consists of 95% first lien secured debt, with a weighted average yield of 10.2%[23]. - The company has maintained a floating rate debt portfolio, with $2.9 billion in floating rate amounts as of September 30, 2025, representing 100% of the total[23]. Investment Commitments and Repayments - New investment commitments during the quarter totaled $138 million, with gross fundings of $142 million[1]. - The company received a net repayment of approximately $97 million from Merx Aviation Finance, reducing its exposure to 3.3% of the total portfolio[1]. - The company upsized and extended the maturity of Bethesda CLO 1, increasing its size from $402.4 million to $646.4 million[19]. - The available remaining capacity under the Facility was $575 million as of September 30, 2025[14]. - The company did not repurchase any shares during the quarter, with a total of 16,069,776 shares repurchased since the program's inception[12]. Dividends - The Board declared a dividend of $0.38 per share, payable on December 23, 2025[3]. Forward-Looking Statements and Risks - MFIC's forward-looking statements include expectations regarding future operating results and distribution projections[33]. - The company anticipates potential impacts from supply chain disruptions, tariffs, and trade disputes on its business prospects[33]. - MFIC acknowledges risks associated with changes in economic conditions, including inflation and interest rate fluctuations[33]. - The company plans to reposition its investment portfolio and explore new strategic initiatives[33]. - MFIC's forward-looking statements are based on information available as of the date of the release and may not be updated[33].

Investment Activity - As of September 30, 2025, the company made investments totaling $400.4 million in the three months ended September 30, 2025, compared to $911.9 million in the same period of 2024[515]. - The company reported net investment activity of $(148.0) million for the three months ended September 30, 2025, down from $584.6 million in the same period of 2024[515]. - Total invested capital since the initial public offering in April 2004 reached $26.6 billion across 837 portfolio companies by September 30, 2025[519]. - As of September 30, 2025, $3.13 billion or 98.2% of the Company's investments were classified as Level 3, indicating a high proportion of private investments relative to total investments[527]. Portfolio Composition - The portfolio composition as of September 30, 2025, included 95% in first lien secured debt, up from 92% as of December 31, 2024[517]. - The weighted average yield on first lien secured debt decreased to 10.2% as of September 30, 2025, from 10.8% at the end of 2024[517]. - The average debt yielding portfolio increased from $2.76 billion to $2.94 billion, while the average yield for the total debt portfolio decreased from 11.5% to 10.3%[538]. - As of September 30, 2025, the majority of the company's debt portfolio investments bore interest at variable rates, which are generally SOFR-based and typically reset every one to six months[568]. Income and Expenses - Total investment income for the three months ended September 30, 2025 was $82.6 million, consistent with $82.1 million for the same period in 2024[536]. - For the nine months ended September 30, 2025, total investment income increased by $22.9 million, primarily driven by an increase in interest income due to a higher income-bearing investment portfolio[540]. - Net expenses for the three months ended September 30, 2025 increased by $3.3 million, primarily due to an increase in management and performance-based incentive fees of $2.9 million[541]. - For the nine months ended September 30, 2025, net expenses increased by $13.1 million, primarily driven by an increase in interest and other debt expenses of $10 million[542]. Realized and Unrealized Gains/Losses - For the three months ended September 30, 2025, the company recognized net realized losses of $19.2 million, primarily due to the write-off of Ambrosia Buyer Corp. and the restructure of New Era Technology, Inc.[543]. - For the nine months ended September 30, 2025, the company reported net realized losses of $33.3 million, driven by the restructure of Renovo, Mitel Networks, and New Era Technology, along with a partial write-off of Ambrosia Buyer Corp.[546]. - The company recognized gross unrealized gains of $44.7 million and gross unrealized losses of $33.4 million for the three months ended September 30, 2025, resulting in a net change in unrealized gains of $11.3 million[548]. - For the nine months ended September 30, 2025, the company reported gross unrealized gains of $66.8 million and gross unrealized losses of $63.6 million, leading to a net change in unrealized losses of $3.2 million[549]. Distributions and Stockholder Information - Distributions paid to stockholders during the three months ended September 30, 2025 totaled $35.5 million ($0.38 per share), compared to $54.4 million ($0.58 per share) in the same period of 2024[558]. - The company maintains an "opt out" dividend reinvestment plan for common stockholders, allowing them to receive cash dividends unless they opt out[560]. - The company may face limitations on distributions due to asset coverage tests applicable to BDCs and potential defaults under its revolving credit facility[561]. Management and Operational Changes - The company appointed Joseph Durkin as Chief Accounting Officer effective September 4, 2025[521]. - The company expects general and administrative operating expenses to increase moderately in dollar terms, particularly during periods of asset growth[514]. Financial Position and Risk Management - The company has $1.66 billion in aggregate lender commitments under the Senior Secured Facility, with $575.1 million of unused capacity as of September 30, 2025[555]. - The company anticipates that its current cash and cash equivalents, along with available borrowing capacity, will be adequate to meet cash needs for daily operations for at least the next twelve months[553]. - A 150 basis point increase in interest rates is estimated to increase net investment income by $14.7 million, while a 150 basis point decrease is estimated to decrease net investment income by $14.0 million[570]. - The company regularly measures exposure to interest rate risk and assesses whether hedging transactions are necessary to mitigate this exposure[569]. - The company may hedge against interest rate fluctuations using standard hedging instruments, but this may limit participation in benefits from lower interest rates[571]. Tax and Compliance - To maintain RIC status, the company must distribute at least 90% of ordinary income and realized net short-term capital gains, but currently expects to generate cumulative net capital gains in the foreseeable future due to substantial net capital loss carryforwards[559]. - Income from origination, structuring, closing, commitment, and other upfront fees associated with investments in portfolio companies is treated as taxable income and distributed to stockholders[562]. - The fair value of investments may fluctuate significantly due to the lack of readily available market values, impacting the realized gains or losses[566].