Hercules Capital(US:HTGC)2023-05-04 20:20PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents unaudited consolidated financial statements and notes, detailing assets, operations, cash flows, and investments for Q1 2023 and FY2022 Consolidated Statements of Assets and Liabilities This section presents the unaudited consolidated statements of assets and liabilities as of March 31, 2023, and December 31, 2022 | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Total assets | $3,251,819 | $3,028,855 | | Total investments, at fair value | $3,130,178 | $2,963,955 | | Cash and cash equivalents | $71,129 | $15,797 | | Total liabilities | $1,752,813 | $1,627,396 | | Total net assets | $1,499,006 | $1,401,459 | | Net asset value per share | $10.82 | $10.53 | Consolidated Statements of Operations This section presents the unaudited consolidated statements of operations for the three months ended March 31, 2023, and 2022 | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :--------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total investment income | $105,090 | $65,157 | | Total net operating expenses | $39,591 | $29,370 | | Net investment income | $65,499 | $35,787 | | Net realized gain (loss) | $7,960 | $(2,381) | | Net change in unrealized appreciation (depreciation) | $21,105 | $(36,742) | | Net increase (decrease) in net assets from operations | $94,564 | $(3,336) | | Net investment income before gains and losses per common share (Basic) | $0.48 | $0.30 | | Change in net assets from operations per common share (Basic) | $0.69 | $(0.03) | Consolidated Statements of Changes in Net Assets This section presents the unaudited consolidated statements of changes in net assets for the three months ended March 31, 2023, and 2022 | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :------------------------------------------------- | :----------------------------- | :----------------------------- | | Balance as of period start | $1,401,459 | $1,308,547 | | Net increase (decrease) in net assets from operations | $94,564 | $(3,336) | | Public offering, net of offering expenses | $65,342 | $85,249 | | Distributions | $(64,774) | $(57,882) | | Balance as of period end | $1,499,006 | $1,333,448 | Consolidated Statements of Cash Flows This section presents the unaudited consolidated statements of cash flows for the three months ended March 31, 2023, and 2022 | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :--------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by (used in) operating activities | $(80,874) | $(188,622) | | Net cash provided by (used in) investing activities | $(94) | $(50) | | Net cash provided by (used in) financing activities | $134,040 | $114,864 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $53,072 | $(73,808) | | Cash, cash equivalents, and restricted cash at end of period | $78,948 | $62,457 | - Operating activities used less cash in Q1 2023 compared to Q1 2022, primarily due to a $111.2 million increase in principal and fee repayments received on debt investments and a $6.2 million increase in proceeds from equity sales330 Consolidated Schedule of Investments as of March 31, 2023 This section presents the unaudited consolidated schedule of investments as of March 31, 2023 | Investment Type | Fair Value (in thousands) | Percentage of Total Portfolio | | :-------------------------- | :------------------------ | :---------------------------- | | Senior Secured Debt | $2,910,526 | 93.0% | | Unsecured Debt | $58,125 | 1.9% | | Preferred Stock | $40,345 | 1.3% | | Common Stock | $84,072 | 2.7% | | Warrants | $33,210 | 1.0% | | Investment Funds & Vehicles | $3,900 | 0.1% | | Total | $3,130,178 | 100.0% | Top 3 Industry Sectors by Fair Value (March 31, 2023) | Industry Sector | Fair Value (in thousands) | Percentage of Total Portfolio | | :-------------------------- | :------------------------ | :---------------------------- | | Drug Discovery & Development | $1,220,057 | 39.0% | | Software | $828,712 | 26.5% | | Consumer & Business Services | $474,883 | 15.2% | - The PRIME interest rate was 8.00% as of March 31, 2023, with gross unrealized appreciation for federal income tax purposes totaling $87.9 million and gross unrealized depreciation at $106.6 million46 Consolidated Schedule of Investments as of December 31, 2022 This section presents the consolidated schedule of investments as of December 31, 2022 | Investment Type | Fair Value (in thousands) | Percentage of Total Portfolio | | :-------------------------- | :------------------------ | :---------------------------- | | Senior Secured Debt | $2,741,388 | 92.5% | | Unsecured Debt | $54,056 | 1.8% | | Preferred Stock | $41,488 | 1.4% | | Common Stock | $92,484 | 3.1% | | Warrants | $30,646 | 1.1% | | Investment Funds & Vehicles | $3,893 | 0.1% | | Total | $2,963,955 | 100.0% | Top 3 Industry Sectors by Fair Value (December 31, 2022) | Industry Sector | Fair Value (in thousands) | Percentage of Total Portfolio | | :-------------------------- | :------------------------ | :---------------------------- | | Drug Discovery & Development | $1,150,707 | 38.8% | | Software | $798,264 | 26.9% | | Consumer & Business Services | $439,384 | 14.8% | - The PRIME interest rate was 7.50% as of December 31, 2022, with gross unrealized appreciation for federal income tax purposes totaling $72.2 million and gross unrealized depreciation at $112.0 million71 Notes to Consolidated Financial Statements This section provides comprehensive notes to the unaudited consolidated financial statements Note 1. Description of Business Hercules Capital, Inc. is a specialty finance BDC providing senior secured loans to high-growth, venture-backed