Company Overview - MidCap Financial Investment Corporation (NASDAQ: MFIC) is a closed-end, externally managed, diversified management investment company that operates as a business development company (BDC) under the Investment Company Act of 1940 [3] - The company is externally managed by Apollo Investment Management, L.P., an affiliate of Apollo Global Management, Inc., focusing on generating current income and long-term capital appreciation [3] - MidCap primarily invests in first lien senior secured loans to privately held U.S. middle-market companies, defined as those with less than $75 million in EBITDA [3] Upcoming Financial Reporting - The company will report its results for the quarter ended June 30, 2025, after the market closes on August 11, 2025 [1] - A conference call will be held on August 12, 2025, at 8:30 a.m. Eastern Time, with participation details provided for interested parties [2]

Group 1 - MidCap Financial (NASDAQ: MFIC) reported first-quarter results that were in line with other business development corporations (BDCs) such as Ares Capital (ARCC), but the results were considered weak [1] - The earnings reported by MidCap Financial appear weak when compared to similar earnings at current Federal Reserve interest rates [1]

Financial Data and Key Metrics Changes - The company reported net investment income of $37 million for the quarter, corresponding to an annualized return on equity (ROE) of 9.8% [6] - GAAP net income per share was $0.32, reflecting an annualized ROE of 8.7% [6] - NAV per share decreased to $14.93, down $0.05 or approximately 30 basis points [6] - Total investment income for the quarter was approximately $78.7 million, down $3.5 million or 4.2% compared to the prior quarter [36] - Net investment income per share was $0.37, with a net loss of approximately $4 million or $0.05 per share [40][41] Business Line Data and Key Metrics Changes - The portfolio had a fair value of $3.19 billion, invested in 240 companies across 49 different industries [23] - Direct origination and other represented 92% of the total portfolio, up from 90% in the previous quarter [23] - The weighted average yield at cost of the direct origination portfolio was 10.7%, down from 11% in the previous quarter [25] - The weighted average net leverage on new commitments was 4.2x, down from 4.3x in the prior quarter [21] Market Data and Key Metrics Changes - The company made $376 million of new commitments during the quarter, with a weighted average spread of 513 basis points across 33 different companies [20] - The non-direct origination assets onboarded from mergers represented just 2% of the total portfolio at fair value [9] - MidCap Financial closed approximately $6.5 billion of commitments during the quarter, despite muted sponsor M&A activity [10] Company Strategy and Development Direction - The company focuses on building a diversified portfolio of first lien floating rate direct corporate loans in less cyclical industries [7][26] - The management believes the core middle market offers attractive opportunities across cycles and does not compete directly with the broadly syndicated market or the high yield market [11] - The company is actively deploying capital from mergers and has a robust pipeline for future investments [22] Management's Comments on Operating Environment and Future Outlook - Management noted that the current uncertainty stemming from trade tariffs could pose challenges, but the impact is expected to be limited [8] - The company is monitoring the speed of confidence restoration among consumers and corporates, which is crucial for economic recovery [16] - Management expressed confidence in the portfolio's stability, with no signs of general credit weakness observed [30] Other Important Information - The company declared a quarterly dividend of $0.38 per share, payable on June 26, 2025 [19] - The company repurchased approximately 477,000 shares at a weighted average price of $12.75, which had an accretive impact on NAV per share [42] Q&A Session Summary Question: Can you discuss the strong fundings in Q2 despite cautious commentary? - Management indicated that strong deployment in Q1 was a result of activity that commenced earlier, and they expect fewer auctions in the latter half of the year [47] Question: What is the sustainability of the dividend relative to NII? - Management expressed comfort in their earnings power and capital plan, noting that prepayment income can fluctuate [50] Question: How dependent is MFIC on M&A activity for new originations? - Management clarified that MFIC is not completely reliant on M&A activity, as there are existing portfolios and opportunities for growth [55] Question: What is the exposure to government contracts in the portfolio? - Management stated that they have limited exposure to government payments and have always assessed such risks in their underwriting [70] Question: What is the meaningful exposure to tariff-affected countries? - Management indicated that the exposure is in single digits and emphasized their focus on U.S. companies with less complex supply chains [74] Question: What are the trends in amendment activity? - Management noted that amendment activity was relatively flat quarter over quarter, with no significant changes observed [77]

Financial Data and Key Metrics Changes - Net investment income for Q1 2025 was $37 million, corresponding to an annualized return on equity (ROE) of 9.8% [6] - GAAP net income per share was $0.32 for the quarter, corresponding to an annualized ROE of 8.7% [6] - NAV per share was $14.93 at the end of March, down $0.05 or approximately 30 basis points [6][7] - Total investment income for March was approximately $78.7 million, down $3.5 million or 4.2% compared to the prior quarter [36] - Net investment income per share was $0.37, reflecting a net loss of approximately $4 million or $0.05 per share [40][41] Business Line Data and Key Metrics Changes - MFIC made new commitments totaling $376 million during the quarter, with a weighted average spread of 513 basis points across 33 different companies [21] - The weighted average net leverage on new commitments was 4.2x, down from 4.3x in the prior quarter [22] - Direct origination and other represented 92% of the total portfolio, up from 90% last quarter [23] - The weighted average yield at cost of the direct origination portfolio was 10.7%, down from 11% in the previous quarter [26] Market Data and Key Metrics Changes - MidCap Financial closed approximately $6.5 billion of commitments during the quarter, despite muted sponsor M&A activity [10] - The weighted average net leverage of borrowers was 5.25 times at the end of March, down from 5.5 times at the end of December [31] - Investments on nonaccrual status decreased to 0.9% of the portfolio at fair value, down from 1.3% last quarter [33] Company Strategy and Development Direction - The company focuses on building a diversified portfolio of first lien floating rate direct corporate loans in less cyclical industries [7][30] - The management believes the core middle market offers attractive opportunities across cycles and does not compete directly with the broadly syndicated market or the high yield market [11][19] - The company is actively monitoring the impact of trade tariffs on its portfolio and has categorized its direct lending portfolio based on the severity of the tariffs [29] Management's Comments on Operating Environment and Future Outlook - The management noted that the current economic environment is characterized by volatility and uncertainty, particularly due to trade tariffs and potential recession fears [15][18] - They expect that the uncertainty in public debt markets may drive borrowers to seek solutions in the private market, which could benefit direct lenders [18] - The management remains optimistic about the company's ability to increase earnings despite the challenges posed by the economic environment [49] Other Important Information - The company declared a quarterly dividend of $0.38 per share, payable on June 26, 2025 [20] - The company repurchased approximately 477,000 shares at a weighted average price of $12.75, which had an accretive impact on NAV per share of approximately $0.01 [43] Q&A Session Summary Question: Can you discuss the strong fundings in Q2 despite cautious commentary? - Management explained that the strong deployment in Q1 reflects activity that commenced earlier in the year, and they expect fewer auctions in the latter half of the year [47] Question: What is the outlook for dividend sustainability relative to NII? - Management expressed comfort in their earnings power and capital plan, noting that prepayment income can fluctuate [49] Question: How dependent is MFIC on M&A activity for new originations? - Management clarified that MFIC is not completely reliant on M&A activity, as there are existing portfolios and opportunities for growth [55] Question: What is the current assessment of M&A recovery timeline? - Management indicated that the timeline for M&A recovery is uncertain, but significant capital expenditures and infrastructure spending may create credit opportunities [63] Question: What is the exposure to tariff-affected countries in the portfolio? - Management stated that the exposure is in single digits and emphasized their focus on U.S. companies with less reliance on diverse supply chains [74] Question: What trends are observed in amendment activity? - Management noted that amendment activity was relatively flat quarter over quarter, with no significant changes in covenant violations [76]

Core Insights - MidCap Financial Investment (MFIC) reported revenue of $78.7 million for the quarter ended March 2025, reflecting a year-over-year increase of 15.2% but falling short of the Zacks Consensus Estimate of $82.29 million by 4.37% [1] - The company's earnings per share (EPS) was $0.37, down from $0.44 in the same quarter last year, and also below the consensus estimate of $0.39, resulting in an EPS surprise of -5.13% [1] Financial Performance Metrics - Interest income was reported at $74.60 million, which is a 15.5% increase compared to the previous year but below the average estimate of $80.87 million [4] - Other income from investments was $0.33 million, significantly lower than the estimated $0.93 million, representing a year-over-year decline of 80.4% [4] - Dividend income saw a substantial increase to $0.24 million, compared to the average estimate of $0.48 million, marking a year-over-year change of 1900% [4] Stock Performance - Over the past month, shares of MidCap Financial have returned +9.9%, outperforming the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

This quarterly report represents an earnings surprise of -5.13%. A quarter ago, it was expected that this investment company would post earnings of $0.41 per share when it actually produced earnings of $0.40, delivering a surprise of -2.44%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. MidCap Financial, which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $78.7 million for the quarter ended March 2025, missing the Zacks Conse ...

Unless otherwise noted, information as of March 31, 2025. Confidential and Proprietary - Not for distribution, in whole or in part, without the express written consent of Apollo Global Management, Inc. It should not be assumed that investments made in the future will be profitable or will equal the performance of the investments shown in this document. Financial Results for the Quarter Ended March 31, 2025 MidCap Financial Investment Corporation May 12, 2025 Disclaimers, Definitions and Important Notes Forw ...

[Financial Results for the Quarter Ended March 31, 2025](index=1&type=section&id=Financial%20Results%20for%20the%20Quarter%20Ended%20March%2031%2C%202025) [Quarterly Highlights and CEO Statement](index=1&type=section&id=Quarterly%20Highlights%20and%20CEO%20Statement) MidCap Financial Investment Corporation reported Q1 2025 net investment income of **$0.37 per share**, NAV of **$14.93**, declared a **$0.38 per share** dividend, and achieved strong portfolio growth Q1 2025 Key Financial Metrics vs. Q4 2024 | Metric | Q1 2025 (Ended Mar 31, 2025) | Q4 2024 (Ended Dec 31, 2024) | | :--- | :--- | :--- | | Net Investment Income per Share | $0.37 | $0.40 | | Net Asset Value (NAV) per Share | $14.93 | $14.98 | - The Board of Directors declared a dividend of **$0.38 per share**, payable on June 26, 2025, to stockholders of record as of June 10, 2025[3](index=3&type=chunk) - CEO Tanner Powell highlighted **solid Q1 results**, including a **reduction in non-accruals**, **strong portfolio growth** from MidCap Financial originations, and **strategic stock repurchases** below NAV[4](index=4&type=chunk) - Key activities in the quarter included[5](index=5&type=chunk) - New investment commitments: **$376 million** - Net fundings: **$170 million** - Net leverage: **1.31x** - Share repurchases: **476,656 shares** for **$6.1 million** - Completed a **$529.6 million** CLO transaction in February 2025 [Financial Highlights](index=3&type=section&id=Financial%20Highlights) Total assets increased to **$3.36 billion** as of March 31, 2025, while net assets slightly declined to **$1.39 billion**, and net leverage rose to **1.31x** Financial Highlights (Quarter-over-Quarter) | ($ in billions, except per share data) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $3.36 | $3.19 | | Investment portfolio (fair value) | $3.19 | $3.01 | | Debt outstanding | $1.94 | $1.75 | | Net assets | $1.39 | $1.40 | | Net asset value per share | $14.93 | $14.98 | | Net leverage ratio | 1.31x | 1.16x | [Portfolio and Investment Activity](index=3&type=section&id=Portfolio%20and%20Investment%20Activity) Robust Q1 2025 investment activity saw **$391.9 million** in new investments, increasing portfolio companies to **240**, with **93%** in first lien secured debt and a **9.4%** total portfolio yield [Investment Activity Summary](index=3&type=section&id=Investment%20Activity%20Summary) Investment Activity for the Three Months Ended March 31 | (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Investments made in portfolio companies | $391.9 | $152.8 | | Investments sold | ($43.9) | — | | Investments repaid | ($177.6) | ($136.9) | | **Net investment activity** | **$170.4** | **$15.9** | | Portfolio companies at end of period | 240 | 154 | [Portfolio Composition and Yields](index=6&type=section&id=Portfolio%20Composition%20and%20Yields) - As of March 31, 2025, first lien secured debt comprised **93%** of the portfolio at fair value, consistent with the prior quarter's **92%**[18](index=18&type=chunk) Weighted Average Yields (at Amortized Cost) as of March 31, 2025 | Portfolio Type | Weighted Average Yield | | :--- | :--- | | First lien secured debt | 10.5% | | Total debt portfolio | 10.5% | | Total portfolio | 9.4% | - The debt portfolio remains predominantly floating rate, with **99%** of investments at fair value having floating interest rates[18](index=18&type=chunk) [Operating Results](index=3&type=section&id=Operating%20Results) MFIC generated **$34.3 million** in net investment income for Q1 2025, or **$0.37 per share**, with a net realized and unrealized loss of **$4.0 million**, resulting in a **$30.3 million** net increase in net assets Operating Results for the Three Months Ended March 31 | (in millions, except per share) | 2025 | 2024 | | :--- | :--- | :--- | | Net investment income | $34.3 | $28.5 | | Net realized and change in unrealized gains (losses) | ($4.0) | ($3.1) | | **Net increase in net assets from operations** | **$30.3** | **$25.5** | | Net investment income per share | $0.37 | $0.44 | | Earnings per share — basic | $0.32 | $0.39 | - Total investment income for Q1 2025 was **$78.7 million**, an increase from **$68.3 million** in Q1 2024, primarily driven by higher interest income from non-controlled/non-affiliated investments[23](index=23&type=chunk) - Total net expenses for Q1 2025 were **$44.4 million**, up from **$39.8 million** in Q1 2024, mainly due to higher interest, debt, and management fee expenses[23](index=23&type=chunk) [Capital Management](index=4&type=section&id=Capital%20Management) The company repurchased **476,656 shares** for **$6.1 million** at a discount to NAV, with total debt at **$1.942 billion** and **$548 million** available under its revolving credit facility [Share Repurchase Program](index=4&type=section&id=Share%20Repurchase%20Program) - In Q1 2025, the Company repurchased **476,656 shares** for a total of **$6.1 million**[11](index=11&type=chunk) - The weighted average repurchase price was **$12.75 per share**, representing a discount of approximately **14.72%** to the average NAV for the quarter[11](index=11&type=chunk) - As of May 12, 2025, **$20.8 million** remained available for future share repurchases under the current Board authorization[12](index=12&type=chunk) [Liquidity and Debt](index=4&type=section&id=Liquidity%20and%20Debt) - As of March 31, 2025, total outstanding debt obligations were **$1.942 billion**[14](index=14&type=chunk) - The debt structure includes Senior Unsecured Notes, CLO notes, and **$1.106 billion** outstanding under the multi-currency revolving credit facility[14](index=14&type=chunk) - The company had **$548 million** of available borrowing capacity under its revolving credit facility as of the quarter's end[14](index=14&type=chunk) [Detailed Financial Statements](index=7&type=section&id=Detailed%20Financial%20Statements) Unaudited consolidated financial statements show total assets of **$3.36 billion** and net assets of **$1.39 billion** as of March 31, 2025, with **$34.3 million** in net investment income [Consolidated Statements of Assets and Liabilities](index=7&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Consolidated Statements of Assets and Liabilities (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,355,699** | **$3,190,950** | | Total Liabilities | $1,962,439 | $1,786,304 | | **Net Assets** | **$1,393,260** | **$1,404,646** | | Net Asset Value Per Share | $14.93 | $14.98 | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations (Unaudited, in thousands) | Three Months Ended March 31, 2025 | Amount | | :--- | :--- | | Total Investment Income | $78,698 | | Net Expenses | $44,416 | | **Net Investment Income** | **$34,282** | | Net Realized and Change in Unrealized Gains (Losses) | ($3,952) | | **Net Increase in Net Assets Resulting from Operations** | **$30,330** | [Corporate and Shareholder Information](index=5&type=section&id=Corporate%20and%20Shareholder%20Information) The company will host an earnings conference call on **May 13, 2025**, operating as a BDC managed by Apollo, focusing on U.S. middle-market senior secured loans, with standard disclaimers [Conference Call and Supplemental Information](index=5&type=section&id=Conference%20Call%20and%20Supplemental%20Information) - An earnings conference call is scheduled for Tuesday, **May 13, 2025**, at 8:30 a.m. Eastern Time[16](index=16&type=chunk) - A supplemental information package is available in the Shareholders section of the Company's website[17](index=17&type=chunk) [About MidCap Financial Investment Corporation](index=9&type=section&id=About%20MidCap%20Financial%20Investment%20Corporation) - MFIC is a closed-end, externally managed **Business Development Company (BDC)** that has elected to be treated as a **Regulated Investment Company (RIC)** for tax purposes[27](index=27&type=chunk) - The company is managed by an affiliate of **Apollo Global Management** and its primary investment objective is to generate current income by investing in **first lien senior secured loans** to **U.S. middle-market companies**[27](index=27&type=chunk) [Important Information and Forward-Looking Statements](index=9&type=section&id=Important%20Information%20and%20Forward-Looking%20Statements) - Investors are advised to carefully consider the company's objectives, risks, and expenses by reading the prospectus filed with the SEC[24](index=24&type=chunk) - The report contains forward-looking statements that are subject to risks and uncertainties; past performance is not a guarantee of future results[26](index=26&type=chunk)[28](index=28&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents MidCap Financial Investment Corporation's unaudited consolidated financial statements and detailed notes for the quarter ended March 31, 2025 [Consolidated Statements of Assets and Liabilities](index=3&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and net assets as of March 31, 2025, and December 31, 2024 Consolidated Statements of Assets and Liabilities (in thousands) | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | **Assets** | | | | Investments at fair value | $3,188,621 | $3,014,416 | | Cash and cash equivalents | $83,703 | $74,357 | | Total Assets | $3,355,699 | $3,190,950 | | **Liabilities** | | | | Debt | $1,935,242 | $1,751,621 | | Total Liabilities | $1,962,439 | $1,786,304 | | **Net Assets** | | | | Net Assets | $1,393,260 | $1,404,646 | | Net Asset Value Per Share | $14.93 | $14.98 | - Total assets increased by **$164,749 thousand** from December 31, 2024, to March 31, 2025, primarily driven by an increase in investments at fair value and cash and cash equivalents. Total liabilities also increased by **$176,135 thousand**, mainly due to an increase in debt[10](index=10&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This statement outlines the company's financial performance, including investment income, expenses, and net increase in net assets from operations for the reported periods Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Total Investment Income | $78,698 | $68,331 | | Total Expenses | $45,222 | $39,955 | | Net Investment Income | $34,282 | $28,544 | | Net Realized Gains (Losses) | $3,087 | $(8,088) | | Net Change in Unrealized Gains (Losses) | $(7,039) | $5,033 | | Net Increase (Decrease) in Net Assets Resulting from Operations | $30,330 | $25,489 | | Earnings Per Share — Basic | $0.32 | $0.39 | - Total investment income increased by **$10,367 thousand (15.17%)** year-over-year, primarily driven by higher interest income from non-controlled/non-affiliated investments. Net investment income increased by **$5,738 thousand (20.10%)** YoY[12](index=12&type=chunk) - The company reported net realized gains of **$3,087 thousand** in Q1 2025, a significant improvement from net realized losses of **$8,088 thousand** in Q1 2024. However, net change in unrealized gains (losses) shifted from a gain of **$5,033 thousand** in Q1 2024 to a loss of **$7,039 thousand** in Q1 2025[12](index=12&type=chunk) [Consolidated Statements of Changes in Net Assets](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) This statement details the changes in the company's net assets, reflecting operational results, distributions, and capital share transactions over the periods Consolidated Statements of Changes in Net Assets (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net Increase (Decrease) in Net Assets Resulting from Operations | $30,330 | $25,489 | | Net Decrease in Net Assets Resulting from Distributions to Stockholders | $(35,637) | $(24,798) | | Net Decrease in Net Assets Resulting from Capital Share Transactions | $(6,079) | $0 | | Net increase (decrease) in net assets during the period | $(11,386) | $691 | | Net Assets at End of Period | $1,393,260 | $1,006,001 | | Shares Issued and Outstanding at End of Period | 93,303,622 | 65,253,275 | - Net assets decreased by **$11,386 thousand** in Q1 2025, primarily due to distributions to stockholders and share repurchases, contrasting with a net increase of **$691 thousand** in Q1 2024[13](index=13&type=chunk) - The company repurchased **476,656 shares** of common stock for **$6,079 thousand** in Q1 2025, compared to no repurchases in Q1 2024[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025 Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Used in/Provided by Operating Activities | $(131,308) | $9,372 | | Net Cash Used in/Provided by Financing Activities | $140,534 | $(81,869) | | Net increase (decrease) in cash, cash equivalents and foreign currencies during the period | $9,226 | $(72,497) | | Cash, Cash Equivalents and Foreign Currencies at the End of Period | $85,033 | $49,612 | - Operating activities shifted from providing **$9,372 thousand** in Q1 2024 to using **$131,308 thousand** in Q1 2025, largely due to increased purchases of investments (**$394,120 thousand** in Q1 2025 vs. **$151,447 thousand** in Q1 2024)[16](index=16&type=chunk) - Financing activities provided **$140,534 thousand** in Q1 2025, a significant increase from using **$81,869 thousand** in Q1 2024, driven by higher issuances of debt (**$1,022,282 thousand** in Q1 2025 vs. **$82,300 thousand** in Q1 2024)[16](index=16&type=chunk) [Consolidated Schedule of Investments](index=7&type=section&id=Consolidated%20Schedule%20of%20Investments) This schedule provides a detailed breakdown of the company's investment portfolio by type and industry classification as of March 31, 2025 Investment Portfolio by Type | Investment Type | Cost (in thousands) | Fair Value (in thousands) | % of Total Investments (at Fair Value) | | :---------------- | :------------------ | :------------------------ | :------------------------------------- | | First Lien Secured Debt | $2,997,085 | $2,954,954 | 92.7% | | Second Lien Secured Debt | $14,983 | $8,345 | 0.3% | | Unsecured Debt | $6,080 | $3,409 | 0.1% | | Structured Products and Other | $51,491 | $38,385 | 1.2% | | Preferred Equity | $15,917 | $23,664 | 0.7% | | Common Equity/Interests | $271,256 | $159,649 | 5.0% | | Warrants | $965 | $215 | 0.0% | | **Total Investments before Cash Equivalents** | **$3,357,777** | **$3,188,621** | **100.0%** | - As of March 31, 2025, the portfolio is heavily concentrated in First Lien Secured Debt, representing **92.7%** of total investments at fair value. The total fair value of investments before cash equivalents was **$3,188,621 thousand**[146](index=146&type=chunk)[152](index=152&type=chunk) Investment Portfolio by Industry Classification | Industry Classification | % of Total Investments (at Fair Value) as of March 31, 2025 | | :---------------------- | :---------------------------------------------------------- | | Software | 14.6% | | Health Care Providers & Services | 9.0% | | Passenger Airlines | 5.8% | | Financial Services | 5.7% | | Diversified Consumer Services | 5.7% | | Construction & Engineering | 4.2% | | Commercial Services & Supplies | 3.7% | | Health Care Equipment & Supplies | 3.7% | | Ground Transportation | 3.6% | | Professional Services | 3.5% | | Hotels, Restaurants & Leisure | 3.2% | | IT Services | 2.9% | | Food Products | 2.5% | | Pharmaceuticals | 2.3% | | Trading Companies & Distributors | 2.3% | | Leisure Products | 2.2% | | Insurance | 2.1% | | Chemicals | 2.1% | | Electronic Equipment, Instruments & Components | 1.8% | | Personal Care Products | 1.5% | | Containers & Packaging | 1.4% | | Media | 1.3% | | Life Sciences Tools & Services | 1.3% | | Machinery | 1.2% | | Consumer Staples Distribution & Retail | 1.2% | | Health Care Technology | 1.1% | | Interactive Media & Services | 1.1% | | Specialty Retail | 0.9% | | Textiles, Apparel & Luxury Goods | 0.8% | | Air Freight & Logistics | 0.8% | | Building Products | 0.6% | | Communications Equipment | 0.6% | | Biotechnology | 0.6% | | Automobile Components | 0.6% | | Transportation Infrastructure | 0.5% | | Electrical Equipment | 0.5% | | Paper & Forest Products | 0.5% | | Energy Equipment & Services | 0.4% | | Entertainment | 0.4% | | Semiconductors & Semiconductor Equipment | 0.3% | | Technology Hardware, Storage & Peripherals | 0.3% | | Real Estate Management & Development | 0.2% | | Aerospace & Defense | 0.2% | | Wireless Telecommunication Services | 0.2% | | Beverages | 0.2% | | Electric Utilities | 0.1% | | Diversified Telecommunication Services | 0.1% | | Household Durables | 0.1% | | Independent Power & Renewable Electricity Producers | 0.1% | | **Total Investments** | **100.0%** | - The company transitioned its industry classification to the Global Industry Classification System (GICS) effective March 31, 2025. The largest industry concentrations are **Software (14.6%)**, **Health Care Providers & Services (9.0%)**, and **Passenger Airlines (5.8%)**[155](index=155&type=chunk) [Notes to Consolidated Financial Statements](index=104&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide comprehensive explanations and additional details supporting the consolidated financial statements, covering key accounting policies and events [Note 1. Organization](index=104&type=section&id=Note%201.%20Organization) This note describes MidCap Financial Investment Corporation's structure, business as a BDC, RIC election, and recent mergers - MidCap Financial Investment Corporation (MFIC) is a Maryland corporation, a closed-end, externally managed BDC, and has elected to be treated as a RIC for tax purposes. It primarily invests in directly originated first lien senior secured loans to privately held U.S. middle-market companies (**EBITDA < $75 million**)[294](index=294&type=chunk)[298](index=298&type=chunk) - On July 22, 2024, MFIC completed its acquisition of Apollo Senior Floating Rate Fund Inc. (AFT) and Apollo Tactical Income Fund Inc. (AIF) through a two-step merger process, with MFIC as the surviving company. This merger was approved by stockholders in May and June 2024[295](index=295&type=chunk) - Apollo Investment Management, L.P. (AIM) serves as the investment adviser, and Apollo Investment Administration, LLC (AIA) provides administrative services[296](index=296&type=chunk)[297](index=297&type=chunk) [Note 2. Significant Accounting Policies](index=104&type=section&id=Note%202.%20Significant%20Accounting%20Policies) This note details the accounting principles used, including fair value measurement, investment recognition, and income accrual policies - The financial statements are prepared in accordance with GAAP, ASC 946 (Financial Services — Investment Companies), and SEC regulations. The company does not consolidate entities other than investment company subsidiaries or controlled operating companies providing services to it[301](index=301&type=chunk)[302](index=302&type=chunk)[304](index=304&type=chunk) - Investments are recognized on a trade date basis and valued at fair value, classified into a three-tier hierarchy (**Level 1, 2, 3**) based on observability of inputs. The Investment Adviser is designated as the 'valuation designee' responsible for fair value determinations, with Board oversight[311](index=311&type=chunk)[312](index=312&type=chunk)[314](index=314&type=chunk)[316](index=316&type=chunk) - The company accrues interest and dividend income, including Payment-in-Kind (PIK) income, and capitalizes PIK interest/dividends. Loans are generally placed on non-accrual status if principal or interest payments are **30+ days past due** or collection is improbable[329](index=329&type=chunk)[331](index=331&type=chunk) - The company has elected to be treated as a Regulated Investment Company (RIC) for tax purposes, requiring distribution of at least **90%** of its investment company taxable income to avoid corporate-level income taxes[341](index=341&type=chunk) [Note 3. Related Party Agreements and Transactions](index=113&type=section&id=Note%203.%20Related%20Party%20Agreements%20and%20Transactions) This note outlines agreements and transactions with related parties, including management fees, incentive fees, and co-investment activities - The company pays a base management fee of **1.75% (0.4375% quarterly)** of its net asset value and a performance-based incentive fee to Apollo Investment Management, L.P. (AIM). The incentive fee has two components: one based on pre-incentive fee net income (with a preferred return and catch-up mechanism) and another on cumulative net realized capital gains[354](index=354&type=chunk)[355](index=355&type=chunk)[357](index=357&type=chunk)[367](index=367&type=chunk) Related Party Fees (in thousands) | Fee Type (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Management fees | $6,061 | $4,386 | | Performance-based incentive fees | $6,433 | $6,038 | | Administrative services expense | $1,016 | $1,223 | | Administrative service expense reimbursements | $768 | $75 | | Debt expense reimbursements | $38 | $93 | - The fee offset agreement with Merx Aviation Finance, LLC, which provided an offsetting credit against incentive fees, was terminated effective February 21, 2023, in exchange for a **$7.5 million** termination fee[373](index=373&type=chunk)[374](index=374&type=chunk) - As of March 31, 2025, **84%** of the portfolio (**$2,668,475 thousand** at fair value) consisted of co-investments made with affiliates, facilitated by an SEC exemptive order allowing greater flexibility in negotiating co-investment terms[380](index=380&type=chunk)[381](index=381&type=chunk) [Note 4. Earnings Per Share](index=118&type=section&id=Note%204.%20Earnings%20Per%20Share) This note presents the calculation of basic earnings per share and factors influencing its change for the reported periods Earnings Per Share Data | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----- | :-------------------------------- | :-------------------------------- | | Net increase (decrease) in net assets resulting from operations | $30,330 | $25,489 | | Weighted average shares outstanding | 93,677,003 | 65,253,275 | | Basic earnings (loss) per share | $0.32 | $0.39 | - Basic earnings per share decreased from **$0.39** in Q1 2024 to **$0.32** in Q1 2025, despite an increase in net assets from operations, due to a higher weighted average number of shares outstanding following the Mergers[389](index=389&type=chunk) [Note 5. Investments](index=119&type=section&id=Note%205.%20Investments) This note provides detailed information on investment valuation, fair value hierarchy, and investment activity, including purchases and sales Investments by Fair Value Hierarchy (in thousands) | Investment Type (in thousands) | Fair Value (March 31, 2025) | Level 1 | Level 2 | Level 3 | | :----------------------------- | :-------------------------- | :------ | :------ | :------ | | First Lien Secured Debt | $2,954,954 | $— | $58,230 | $2,896,724 | | Second Lien Secured Debt | $8,345 | $— | $4,124 | $4,221 | | Unsecured Debt | $3,409 | $— | $3,300 | $109 | | Structured Products and Other | $38,385 | $— | $14,893 | $23,492 | | Preferred Equity | $23,664 | $— | $— | $23,664 | | Common Equity/Interests | $159,649 | $283 | $— | $159,366 | | Warrants | $215 | $— | $— | $215 | | **Total Investments before Cash Equivalents** | **$3,188,621** | **$283** | **$80,547** | **$3,107,791** | - As of March 31, 2025, **97.5%** of the company's investments (**$3,107,791 thousand**) were classified as Level 3, indicating reliance on unobservable inputs for fair value measurement. This reflects the company's strategy of investing in private middle-market companies[391](index=391&type=chunk)[498](index=498&type=chunk) Investment Activity (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Purchases of investments | $391,908 | $152,791 | | Sales and repayments of investments | $221,491 | $136,868 | | PIK income capitalized | $4,055 | $2,349 | | Investments on non-accrual status (at fair value) | 0.9% | N/A | - The company's foreign currency forward contracts resulted in a net unrealized appreciation of **$24 thousand** for the three months ended March 31, 2025, with a total fair value of **$33 thousand**[415](index=415&type=chunk) [Note 6. Debt and Foreign Currency Transactions and Translations](index=124&type=section&id=Note%206.%20Debt%20and%20Foreign%20Currency%20Transactions%20and%20Translations) This note details the company's debt obligations, asset coverage requirements, and foreign currency transaction impacts - Effective April 4, 2019, the company's asset coverage requirement for senior securities was reduced from **200% to 150%**, allowing it to borrow up to two dollars for every dollar in assets less liabilities not represented by senior securities[417](index=417&type=chunk) Debt Obligations (in thousands) | Debt Obligation (in thousands) | Principal Committed | Principal Outstanding (March 31, 2025) | Fair Value (March 31, 2025) | Final Maturity Date | | :----------------------------- | :------------------ | :------------------------------------- | :-------------------------- | :------------------ | | Senior Secured Facility | $1,660,000 | $1,105,982 | $1,105,982 | 10/17/2029 | | MFIC Bethesda CLO 1 LLC Class A-1 Notes | $232,000 | $232,000 | $232,383 | 10/23/2035 | | MFIC Bethesda CLO 2 LLC Notes | $399,000 | $399,000 | $397,885 | 1/23/2037 | | 2026 Notes | $125,000 | $125,000 | $122,332 | 7/16/2026 | | 2028 Notes | $80,000 | $80,000 | $81,696 | 12/15/2028 | | **Total Debt Obligations** | **$2,496,000** | **$1,941,982** | **$1,940,278** | | - The Senior Secured Facility was amended and restated on October 17, 2024, extending its maturity to October 17, 2029, and allowing for an increase in size up to **$2,722,500 thousand**. It is secured by substantially all of the company's assets[423](index=423&type=chunk) Debt Cost Metrics (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Average debt outstanding | $1,807,602 | $1,370,740 | | Weighted average annualized interest cost | 6.42% | 7.09% | | Total annualized interest cost | 6.83% | 7.65% | [Note 7. Stockholders' Equity](index=130&type=section&id=Note%207.%20Stockholders%27%20Equity) This note describes changes in stockholders' equity, including share repurchases, stock issuances, and dividend reinvestment plans Share Repurchase Plan Status (in millions) | Repurchase Plan Status (in millions) | Maximum Cost of Shares That May Be Repurchased | Cost of Shares Repurchased | Remaining Cost of Shares That May Be Repurchased | | :----------------------------------- | :--------------------------------------------- | :------------------------- | :----------------------------------------------- | | Total as of March 31, 2025 | $275.0 | $254.2 | $20.8 | - During the three months ended March 31, 2025, the company repurchased **476,656 shares** at a weighted average price of **$12.75 per share**, totaling **$6,079 thousand**. This represents a discount of approximately **14.72%** to the average net asset value per share[442](index=442&type=chunk) - On July 22, 2024, in connection with the Mergers with AFT and AIF, the company issued an aggregate of **28,527,003 shares** of common stock, valued at approximately **$440,140 thousand**[448](index=448&type=chunk) - The company has equity distribution agreements with Sales Agents to issue and sell up to **$200,000 thousand** of common stock through 'at the market' (ATM) offerings, though no shares were issued via ATM in Q1 2025[449](index=449&type=chunk) [Note 8. Commitments and Contingencies](index=132&type=section&id=Note%208.%20Commitments%20and%20Contingencies) This note outlines the company's unfunded commitments and potential contingent liabilities as of the reporting date Unfunded Commitments (in thousands) | Commitment Type (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------------- | :------------- | :---------------- | | Unfunded revolver obligations and bridge loan commitments | $261,406 | $233,293 | | Standby letters of credit issued and outstanding | $12,112 | $11,381 | | Unfunded delayed draw loan commitments | $253,741 | $240,984 | | **Total Unfunded Commitments** | **$527,259** | **$485,658** | - Total unfunded commitments increased by **$41,601 thousand** from December 31, 2024, to March 31, 2025, primarily driven by increases in unfunded revolver obligations and delayed draw loan commitments[450](index=450&type=chunk) - The company also had an unfunded revolver commitment of **$50,752 thousand** to its fully controlled affiliate Merx Aviation Finance, LLC as of March 31, 2025, with timing and amount of funding yet to be determined[450](index=450&type=chunk) [Note 9. Financial Highlights](index=133&type=section&id=Note%209.%20Financial%20Highlights) This note presents key financial ratios and per-share data, offering a summary of the company's financial performance and position Per Share Data | Per Share Data | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------- | :-------------------------------- | :-------------------------------- | | Net asset value at beginning of period | $14.98 | $15.41 | | Net investment income | $0.37 | $0.44 | | Net increase in net assets resulting from operations | $0.32 | $0.39 | | Distribution of net investment income | $(0.38) | $(0.38) | | Net asset value at end of period | $14.93 | $15.42 | | Per share market value at end of period | $12.86 | $15.04 | | Total return | (1.93%) | 12.71% | | Shares outstanding at end of period | 93,303,622 | 65,253,275 | Ratio/Supplemental Data | Ratio/Supplemental Data | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Annualized ratio of operating expenses to average net assets | 4.04% | 5.48% | | Annualized ratio of interest and other debt expenses to average net assets | 8.83% | 10.43% | | Annualized ratio of total expenses to average net assets | 12.88% | 15.91% | | Annualized ratio of net investment income to average net assets | 9.94% | 11.42% | | Average debt outstanding (in millions) | $1,807.6 | $1,370.7 | | Annualized portfolio turnover rate | 28.96% | 23.49% | | Asset coverage per unit | $1,717 | $1,712 | - The company's total return was **-1.93%** for the three months ended March 31, 2025, a significant decrease from **12.71%** in the prior year period. The asset coverage ratio as of March 31, 2025, was **172%**[453](index=453&type=chunk)[459](index=459&type=chunk) [Note 10. Mergers with AFT and AIF](index=134&type=section&id=Note%2010.%20Mergers%20with%20AFT%20and%20AIF) This note details the completed mergers with Apollo Senior Floating Rate Fund Inc. and Apollo Tactical Income Fund Inc., including accounting treatment - On July 22, 2024, MidCap Financial Investment Corporation completed its mergers with Apollo Senior Floating Rate Fund Inc. (AFT) and Apollo Tactical Income Fund Inc. (AIF). Each AFT share was converted into **0.9547 MFIC shares**, and each AIF share into **0.9441 MFIC shares**, resulting in the issuance of **28,527,003 MFIC common shares**[456](index=456&type=chunk) - The mergers were accounted for as asset acquisitions, with the consideration paid (fair value of issued MFIC shares plus transaction costs) being less than the fair value of acquired net assets, leading to a recognized deemed contribution from the Investment Adviser[457](index=457&type=chunk)[458](index=458&type=chunk) Purchase Consideration and Acquired Assets (in thousands) | Purchase Consideration (in thousands) | AFT | AIF | AFT / AIF Total | | :------------------------------------ | :------ | :------ | :-------------- | | Common stock issued by the Company | $228,076 | $209,529 | $437,605 | | Deemed contribution from the Investment Advisor | $1,313 | $1,222 | $2,535 | | **Total Purchase Consideration** | **$229,389** | **$210,751** | **$440,140** | | **Assets Acquired:** | | | | | Investments, at fair value | $310,795 | $285,092 | $595,887 | | Cash & Cash Equivalent | $2,699 | $7,232 | $9,931 | | Other Assets | $7,592 | $8,506 | $16,098 | | **Total Assets Acquired** | **$321,086** | **$300,830** | **$621,916** | | **Liabilities Assumed** | **$(91,697)** | **$(90,079)** | **$(181,776)** | | **Net Assets Acquired** | **$229,389** | **$210,751** | **$440,140** | [Note 11. Subsequent Events](index=135&type=section&id=Note%2011.%20Subsequent%20Events) This note discloses significant events that occurred after the reporting period, such as declared distributions - On May 7, 2025, the Board declared a base distribution of **$0.38 per share**, payable on June 26, 2025, to stockholders of record as of June 10, 2025[464](index=464&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=137&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operating results, investment strategy, and critical accounting estimates for the reported periods [Overview](index=137&type=section&id=Overview) This section provides an overview of MidCap Financial Investment Corporation's business as a BDC, its RIC status, and investment focus - MidCap Financial Investment Corporation (MFIC) operates as a Business Development Company (BDC) and has elected Regulated Investment Company (RIC) status for tax purposes. It primarily invests in first lien senior secured loans to U.S. middle-market companies[475](index=475&type=chunk)[479](index=479&type=chunk) - The company's investment adviser, Apollo Investment Management, L.P. (AIM), manages day-to-day operations and investment advisory services. Co-investments with affiliates are made under an SEC exemptive order, ensuring fair allocation and consistency with stockholder interests[477](index=477&type=chunk) - As of March 31, 2025, non-qualifying assets represented approximately **8.5%** of the company's total assets, adhering to the 1940 Act's requirement that at least **70%** of total assets be qualifying assets[480](index=480&type=chunk) [Investments](index=138&type=section&id=Investments) This section outlines the company's investment objective, strategy, and the factors influencing its investment activity - The investment objective is to generate current income and, to a lesser extent, long-term capital appreciation, primarily through directly originated and privately negotiated first lien senior secured loans to U.S. middle-market companies with less than **$75 million** in EBITDA[479](index=479&type=chunk) - The company's investment activity fluctuates based on factors like available capital, M&A activity, and the economic environment. As a BDC, it must maintain at least **70%** of its total assets in 'qualifying assets'[480](index=480&type=chunk) [Revenue](index=139&type=section&id=Revenue) This section describes the primary sources of the company's revenue, including interest, dividends, and various fees - Revenue is primarily generated from interest and dividend income from debt and equity investments, and capital gains. Debt investments typically have **5-10 year terms** with fixed or floating interest rates (e.g., SOFR-based)[482](index=482&type=chunk) - Some investments include Payment-in-Kind (PIK) interest or dividends, which are accrued and added to the investment cost, becoming due at maturity or upon call. Additional revenue sources include commitment, origination, structuring, and managerial assistance fees[482](index=482&type=chunk) [Expenses](index=139&type=section&id=Expenses) This section details the company's operational and transactional costs, including advisory fees, administrative expenses, and interest on debt - The company bears all operational and transactional costs, including investment advisory and management fees, administrative expenses, legal and accounting costs, interest on debt, and fees for evaluating investments. Compensation for AIM's investment professionals is covered by AIM[483](index=483&type=chunk)[486](index=486&type=chunk) - General and administrative operating expenses are expected to increase moderately in dollar terms but may decline as a percentage of total assets during periods of asset growth. Incentive fees and interest expense can also influence overall operating expenses[484](index=484&type=chunk) [Portfolio and Investment Activity](index=140&type=section&id=Portfolio%20and%20Investment%20Activity) This section summarizes the company's investment activity, portfolio composition, and key metrics for the reported periods Investment Activity (in millions) | Metric (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------- | :-------------------------------- | :-------------------------------- | | Investments made in portfolio companies | $391.9 | $152.8 | | Investments repaid | $(221.5) | $(136.9) | | Net investment activity | $170.4 | $15.9 | | Portfolio companies at end of period | 240 | 154 | | Number of investments in new portfolio companies | 20 | 7 | | Number of investments in existing portfolio companies | 78 | 49 | - Net investment activity significantly increased to **$170.4 million** in Q1 2025 from **$15.9 million** in Q1 2024, driven by higher investments made in portfolio companies, including those acquired from the Mergers[485](index=485&type=chunk) Portfolio Composition (at fair value) | Portfolio Composition (at fair value) | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | First lien secured debt | 93% | 92% | | Second lien secured debt | 0% | 1% | | Total secured debt | 93% | 93% | | Common equity/interests and warrants | 5% | 5% | | Weighted average yields, at amortized cost (Secured debt portfolio) | 10.5% | 10.8% | | Floating rate, as percentage of total (at fair value) | 99% | 99% | - The portfolio remains highly concentrated in secured debt (**93%** at fair value), with **99%** of the portfolio being floating rate, indicating sensitivity to interest rate changes. The weighted average yield for the secured debt portfolio slightly decreased from **10.8% to 10.5%** YoY[487](index=487&type=chunk) [Critical Accounting Estimates](index=141&type=section&id=Critical%20Accounting%20Estimates) This section explains the significant accounting estimates and judgments, particularly regarding fair value measurements of investments - The preparation of financial statements requires management to make estimates and assumptions, particularly for fair value measurements, which can materially differ from actual results due to changes in economic conditions, financial markets, and creditworthiness of portfolio companies[492](index=492&type=chunk)[493](index=493&type=chunk) - Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants, classified into a three-tier hierarchy (**Level 1, 2, 3**) based on observability of inputs. Level 3 investments, which constitute **97.5%** of the company's portfolio, rely on unobservable inputs and subjective judgments[494](index=494&type=chunk)[495](index=495&type=chunk)[496](index=496&type=chunk)[498](index=498&type=chunk)[506](index=506&type=chunk) - The valuation process for investments without readily available market quotations involves a multi-step approach, including initial valuations by investment professionals, discussions with senior management, and fair value determinations by the Investment Adviser, often with input from independent valuation firms[502](index=502&type=chunk)[504](index=504&type=chunk) [Results of Operations](index=145&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial performance, including income, expenses, and net asset changes Results of Operations (in millions) | Metric (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------- | :-------------------------------- | :-------------------------------- | | Total investment income | $78.7 | $68.3 | | Net Expenses | $44.4 | $39.8 | | Net Investment Income | $34.3 | $28.5 | | Net realized gains (losses) | $3.1 | $(8.1) | | Net change in unrealized gains (losses) | $(7.0) | $5.0 | | Net Increase in Net Assets Resulting from Operations | $30.3 | $25.5 | - Total investment income increased by **$10.4 million** YoY, primarily due to a **$11.5 million** increase in interest income (including PIK), driven by a larger income-bearing investment portfolio from the Mergers, despite a decrease in the average yield for the total debt portfolio[511](index=511&type=chunk) - Net expenses rose by **$4.6 million** YoY, mainly due to a **$4.3 million** increase in interest and other debt expenses from higher average debt outstanding, partially offset by a decrease in the total annualized cost of debt. Management and incentive fees also increased by **$2.1 million**[512](index=512&type=chunk) - The company reported net realized gains of **$3.1 million** in Q1 2025 (vs. **$(8.1) million** loss in Q1 2024), primarily from the exit of Orgain, Inc. and partial exit of Heubach. Net change in unrealized gains (losses) shifted to a **$(7.0) million** loss in Q1 2025 (vs. **$5.0 million** gain in Q1 2024), driven by underperformance in Renovo, AVAD, LLC, Modern Campus, and restructuring in Mitel Networks, partially offset by gains in Merx equity and The Club Company[513](index=513&type=chunk)[514](index=514&type=chunk)[515](index=515&type=chunk)[516](index=516&type=chunk) [Liquidity and Capital Resources](index=147&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, capital management, and expected ability to meet future cash needs - Liquidity is generated through equity and debt offerings, the Senior Secured Facility, senior notes, special purpose entities, cash flows from operations, and investment sales/repayments. Current cash, short-term investments, and available borrowing capacity are expected to meet cash needs for the next twelve months[517](index=517&type=chunk)[518](index=518&type=chunk) Debt Obligation Maturity Profile (in millions) | Debt Obligation (in millions) | Total | Less than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | | :---------------------------- | :------ | :--------------- | :----------- | :----------- | :---------------- | | Senior Secured Facility | $1,106.0 | $— | $— | $1,106.0 | $— | | 2026 Notes | $125.0 | $— | $125.0 | $— | $— | | 2028 Notes | $80.0 | $— | $— | $80.0 | $— | | MFIC Bethesda CLO 1 LLC Class A-1 | $232.0 | $— | $— | $— | $232.0 | | MFIC Bethesda CLO 2 LLC (Class A-1, Class A-2, Class B and Class C) | $399.0 | $— | $— | $— | $399.0 | | **Total Debt Obligations** | **$1,942.0** | **$—** | **$125.0** | **$1,186.0** | **$631.0** | - As of March 31, 2025, the company had **$547.8 million** of unused capacity under its Senior Secured Facility and **$6.2 million** in letters of credit issued[521](index=521&type=chunk) [Distributions](index=148&type=section&id=Distributions) This section details distributions to stockholders and the requirements for maintaining Regulated Investment Company (RIC) status - Distributions to stockholders totaled **$35.6 million ($0.38 per share)** in Q1 2025, compared to **$24.8 million ($0.38 per share)** in Q1 2024. To maintain RIC status, the company must distribute at least **90%** of its ordinary income and realized net short-term capital gains[524](index=524&type=chunk)[526](index=526&type=chunk) - The company operates an 'opt out' dividend reinvestment plan. Future distributions are determined by the Board and may be limited by asset coverage tests or revolving credit facility covenants[527](index=527&type=chunk)[528](index=528&type=chunk) [PIK Income](index=149&type=section&id=PIK%20Income) This section explains Payment-in-Kind (PIK) income and its implications for the company's financial reporting and distributions PIK Income (in millions) | Metric (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------- | :-------------------------------- | :-------------------------------- | | PIK income | $3.5 | $2.0 | | Total investment income | $78.7 | $68.3 | - PIK income increased to **$3.5 million** in Q1 2025 from **$2.0 million** in Q1 2024. As a RIC, this non-cash income must be distributed to stockholders annually, even if not yet collected in cash[530](index=530&type=chunk) [Related Party Transactions](index=149&type=section&id=Related%20Party%20Transactions) This section refers to detailed information on transactions with related parties, as presented in the financial statement notes - Information on related party transactions is detailed in Note 3 to the consolidated financial statements, covering investment advisory fees, administrative services, and co-investment activities with affiliates[531](index=531&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=150&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, including investment valuation and interest rate fluctuations, and their potential impact [Investment Valuation Risk](index=150&type=section&id=Investment%20Valuation%20Risk) This section highlights the inherent uncertainties in valuing illiquid investments and the potential for differences between fair and realized values - Most portfolio investments lack readily available market values and are valued at fair value as determined in good faith by the Board, with input from management and independent valuation firms. This introduces inherent uncertainty, and realized values may differ materially from recorded fair values[534](index=534&type=chunk) - Investments are generally subject to legal and other resale restrictions, making them less liquid than publicly traded securities. Changes in market environment or other events can cause realized gains/losses to differ from unrealized gains/losses reflected in current valuations[534](index=534&type=chunk) [Interest Rate Risk](index=150&type=section&id=Interest%20Rate%20Risk) This section analyzes the sensitivity of net investment income to interest rate changes, given the variable-rate nature of assets and liabilities - The company's net investment income is sensitive to interest rate changes, as a portion of investments are funded by borrowings. The majority of the debt portfolio investments bear variable interest rates (SOFR-based) with typical durations of **one to six months**, many subject to floors[535](index=535&type=chunk)[536](index=536&type=chunk) Sensitivity of Net Investment Income to Interest Rate Changes (in millions) | Basis Point Change | Net Investment Income (in millions) | Net Investment Income Per Share | | :----------------- | :-------------------------------- | :------------------------------ | | Up 150 basis points | $14.0 | $0.151 | | Up 100 basis points | $9.4 | $0.100 | | Up 50 basis points | $4.7 | $0.050 | | Down 50 basis points | $(4.6) | $(0.049) | | Down 100 basis points | $(9.1) | $(0.097) | | Down 150 basis points | $(13.6) | $(0.145) | - The company regularly assesses and manages interest rate exposure by comparing interest rate sensitive assets to liabilities and may use hedging instruments like futures, options, and forward contracts to mitigate risk, though this may limit participation in lower interest rate benefits[537](index=537&type=chunk)[539](index=539&type=chunk) [Item 4. Controls and Procedures](index=151&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of disclosure controls and procedures and any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=151&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms management's conclusion on the effectiveness of disclosure controls and procedures as of March 31, 2025 - As of March 31, 2025, management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures and concluded they were effective, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[540](index=540&type=chunk) - Management acknowledges that controls and procedures, regardless of design, can only offer reasonable assurance, and judgment is applied in evaluating their cost-benefit relationship[540](index=540&type=chunk) [Changes in Internal Control Over Financial Reporting](index=151&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section states that no material changes in internal control over financial reporting were identified during the quarter - Management has not identified any material changes in the company's internal control over financial reporting during the three months ended March 31, 2025[541](index=541&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=152&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings, nor are any threatened against it - The company is not currently subject to any material legal proceedings, nor are any material legal proceedings threatened against it[543](index=543&type=chunk) - While the company may become involved in various investigations, claims, and legal proceedings in the ordinary course of business, their resolution is not expected to materially affect its business, financial condition, or results of operations[543](index=543&type=chunk) [Item 1A. Risk Factors](index=152&type=section&id=Item%201A.%20Risk%20Factors) This section highlights risks from trade negotiations and government actions, potentially impacting portfolio companies' profitability and operations - Trade negotiations and related government actions, such as increased tariffs by the U.S. government on foreign goods (e.g., from China, Canada, Mexico), may create regulatory uncertainty for portfolio companies and investment strategies[545](index=545&type=chunk) - These actions could increase costs, decrease margins, reduce competitiveness, and adversely affect the revenues and profitability of portfolio companies relying on imported goods. Such developments could depress economic activity and restrict access to suppliers or customers, negatively impacting the company[545](index=545&type=chunk)[546](index=546&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=153&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered equity sales and details the company's common stock repurchase plans and activity - There were no unregistered sales of equity securities during the period[547](index=547&type=chunk) Share Repurchase Plan Status (in millions) | Repurchase Plan Status (in millions) | Maximum Cost of Shares That May Be Repurchased | Cost of Shares Repurchased | Remaining Cost of Shares That May Be Repurchased | | :----------------------------------- | :--------------------------------------------- | :------------------------- | :----------------------------------------------- | | Total as of March 31, 2025 | $275.0 | $254.2 | $20.8 | - The company's Repurchase Plans allow for share repurchases during open window periods and blackout periods, subject to SEC regulations and specified constraints. These plans are designed to repurchase shares on the company's behalf[548](index=548&type=chunk) Historical Share Repurchases (2015-2025) | Month (2015-2025) | Total Number of Shares Purchased | Average Price Paid Per Share* | | :---------------- | :------------------------------- | :---------------------------- | | August 2015 | 510,000 | $19.71 | | ... (various months) | ... | ... | | March 2025 | 476,656 | $12.75 | | **Total** | **16,069,806** | **$15.82** | [Item 3. Defaults Upon Senior Securities](index=156&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - There were no defaults upon senior securities[553](index=553&type=chunk) [Item 4. Mine Safety Disclosures](index=156&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[554](index=554&type=chunk) [Item 5. Other Information](index=156&type=section&id=Item%205.%20Other%20Information) This section confirms that no directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the fiscal quarter ended March 31, 2025 - During the fiscal quarter ended March 31, 2025, none of the company's directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities under Rule 10b5-1(c)[555](index=555&type=chunk) [Item 6. Exhibits](index=157&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, debt agreements, and required certifications - The exhibits include key corporate governance documents (Articles of Amendment, Bylaws), agreements related to the MFIC Bethesda CLO 2 LLC (Indenture, Purchase and Placement Agency Agreement, Collateral Management Agreement, Master Loan Sale Agreement), and required certifications from the CEO and CFO[556](index=556&type=chunk) - All Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents, and Cover Page Interactive Data File) are filed as exhibits[556](index=556&type=chunk)

Financial Performance - The company's net investment income for Q1 2025 was $0.37 per share, down from $0.40 per share in Q4 2024, representing a decrease of 7.5% [1][6] - The net asset value (NAV) per share as of March 31, 2025, was $14.93, a slight decrease of 0.3% from $14.98 as of December 31, 2024 [1][6] - Total assets increased to $3.36 billion as of March 31, 2025, compared to $3.19 billion at the end of 2024 [5][20] Investment Activity - New investment commitments during the quarter totaled $376 million, with gross fundings (excluding revolver fundings) amounting to $357 million [6][8] - The company made investments totaling $391.9 million in portfolio companies during the quarter, compared to $152.8 million in the same period of the previous year [8] - The number of investments in new portfolio companies increased to 20 from 7 year-over-year [8] Debt and Leverage - The company's outstanding debt as of March 31, 2025, was $1.94 billion, up from $1.75 billion at the end of 2024 [5][15] - The net leverage ratio was reported at 1.31x as of March 31, 2025, indicating an increase in leverage compared to previous periods [6][15] Shareholder Returns - A dividend of $0.38 per share was declared on May 7, 2025, payable on June 26, 2025, to stockholders of record as of June 10, 2025 [2][6] - The company repurchased 476,656 shares at a weighted average price of $12.75 per share during the quarter, totaling $6.1 million [11][12] Portfolio Composition - As of March 31, 2025, 93% of the investment portfolio was in first lien secured debt, maintaining a consistent level compared to previous quarters [17][18] - The weighted average yield on the total debt portfolio was 10.5% as of March 31, 2025, slightly down from 10.8% in the previous quarter [17][18]