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]