MidCap Financial Investment (MFIC) - 2025 Q2 - Quarterly Report

Financial Performance - Total investment income for the three months ended September 30, 2024 increased by $13.2 million compared to the same period in 2023, primarily driven by higher interest income[338]. - Interest income for the three months ended September 30, 2024 was$77.4 million, up from $66.7 million in 2023, reflecting a higher income-bearing investment portfolio[337]. - Net investment income for the three months ended September 30, 2024 was$38.1 million, compared to $27.9 million in 2023[337]. - For the nine months ended September 30, 2024, total investment income increased by$14.8 million compared to the same period in 2023, driven by higher interest income[339]. - PIK income for the nine months ended September 30, 2024, was $7.5 million on total investment income of$219.6 million, compared to $2.1 million on total investment income of$204.6 million for the same period in 2023[368]. Investment Activity - The company made investments totaling $911.9 million in portfolio companies during the three months ended September 30, 2024, compared to$30.3 million in the same period of 2023[305]. - The net investment activity for the three months ended September 30, 2024, was $584.6 million, a significant increase from a net activity of$(42.6) million in the same period of 2023[305]. - The number of portfolio companies increased to 250 at the end of the period, up from 149 at the beginning of the period[305]. - Total invested capital since the IPO in April 2004 reached $25.2 billion across 783 portfolio companies[310]. - The company completed transactions with over 100 different financial sponsors since its inception[310]. Debt and Financing - Total debt obligations as of September 30, 2024, amounted to$1.7789 billion, with $350 million due within one year and$1.0719 billion due in three to five years[359]. - The fixed rate amount as a percentage of total debt was 1% as of September 30, 2024, compared to 0% at the end of 2023[308]. - The floating rate amount increased to $2.7 billion, representing 99$1.705 billion to $1.815 billion until December 22, 2024[312]. Legal Proceedings - On March 14, 2023, a complaint was filed against certain First Lien and Second Lien debt holders of Mitel in New York State Court, alleging breaches of lending agreements[381]. - The trial court granted defendants' motions to dismiss in part and denied them in part on December 5, 2023, with the trial currently in discovery[381]. - Plaintiffs and defendants have taken interlocutory appeals of the court's motion to dismiss ruling, which are pending[381]. - No reasonable estimate of possible loss can be made at this time regarding the legal proceedings[381]. - Other than the disclosed matter, the company is not currently subject to any material legal proceedings[382]. Portfolio Composition - As of September 30, 2024, the portfolio composition included 91$75 million in EBITDA[298]. - As of September 30, 2024, 93.6% of the Company's investments, amounting to $2.83 billion, were classified as Level 3[321]. Market Risks and Expectations - The company anticipates that its actual results could differ materially from forward-looking statements due to various risks and uncertainties[290]. - The estimated annual impact on net investment income from a 150 basis point increase in interest rates is$0.196 per share[376]. - The company believes its current cash and cash equivalents, short-term investments, and anticipated cash flows will be adequate to meet cash needs for daily operations for at least the next twelve months[356]. Expenses - Net expenses for the three months ended September 30, 2024 increased by $3.7 million, primarily due to a$5.9 million rise in interest and other debt expenses attributed to an increase in average debt outstanding from $1.44 billion to$1.72 billion[340]. - The company expects general and administrative operating expenses related to ongoing operations to increase moderately in dollar terms[303]. Valuation and Gains - The company recognized net realized gains of $0.5 million for the three months ended September 30, 2024, compared to net realized losses of$0.2 million in the same period of 2023[342][343]. - The net change in unrealized gains for the nine months ended September 30, 2024 was $1.8 million, primarily driven by write-offs of MSEA Tankers LLC and ViewRay[352]. - Significant realized losses for the nine months ended September 30, 2024 included$15.7 million from MSEA Tankers LLC and $7.1 million from ViewRay[346]. - Significant unrealized losses included ViewRay at$(3.3) million and Renew Financial LLC at $(1.8) million, while Merx Aviation Finance, LLC had an unrealized gain of$2.9 million[354].