Core Insights - EquitiesFirst identifies stocks as an attractive asset class for international investors, providing both dividend income and long-term capital appreciation potential [1] - The company observes that in certain situations, investing in stocks may yield lower returns compared to other sectors, especially when international investors turn bearish and dividend yields are low [1] - Stock financing is seen as an effective risk management strategy, allowing investors to set a price floor for their stocks without sacrificing long-term potential [1] - EquitiesFirst emphasizes the importance of diversifying investments into less popular areas while waiting for valuation rebounds, optimizing investment portfolios [1] Financing Solutions - EquitiesFirst offers financing solutions based on sell-and-repurchase agreements, enabling international investors to finance at low costs through their held stocks in a tax-efficient manner [3] - The company conducts thorough fundamental and technical analysis before providing stock financing, ensuring informed decision-making [3] - With low financing costs and unrestricted use of proceeds, stock financing presents an attractive option for international investors seeking effective capital management [3]

Financial Data and Key Metrics Changes - The first quarter results exceeded expectations, driven by same unit revenue growth of over 6% and NICU days increasing by 2% [3][4] - Adjusted EBITDA was just over $49 million, significantly above expectations, leading to an increase in the full year 2025 adjusted EBITDA outlook from $215 million - $235 million to $220 million - $240 million [4][12] - Consolidated revenue decreased by just over 7%, primarily due to non-same unit activity declining by about $63 million, partially offset by strong same unit growth [8][9] - Practice level operating expenses reflected favorable impacts from cost management initiatives, with salary growth decelerating significantly year over year [4][9] Business Line Data and Key Metrics Changes - Strong volumes in hospital-based services contributed to the overall growth, with NICU days increasing by 2% and modest growth in maternal fetal medicine [3][4] - Same unit pricing was up over 4.6%, driven by favorable payer mix shifts and modest improvement in contract administrative fees [8][9] - Practice level SW and B expenses declined year over year, although increased on a same unit basis due to higher incentive compensation and salary increases [9][10] Market Data and Key Metrics Changes - The accounts receivable DSO was just under 48 days, flat compared to the previous quarter but down over four days year over year, indicating improved cash collections [11][12] - The company ended the quarter with cash of $99 million and net debt of $512 million, reflecting net leverage of just over 2.2 times using the midpoint of the updated adjusted EBITDA outlook for 2025 [11][12] Company Strategy and Development Direction - The company is focused on methodically reinvigorating relationships with hospital and health system partners and aims to be the employer of choice for clinicians [5][6] - The strategic focus is on core areas such as neonatology and maternal fetal medicine, with plans to acquire several NICU, MFM, and OB Hospitalist operations [5][6][43] - The management emphasizes the importance of being a reliable partner for hospitals, which is expected to drive growth opportunities [35][36] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the uncertain healthcare environment and economy, which influences their conservative guidance [16][19] - The company is actively monitoring changes in the economy and potential impacts on family expansion decisions, but does not see specific concerns at this time [17][18] - The management is confident in the company's ability to navigate challenges and believes that their strong balance sheet will provide opportunities for acquisitions [44][46] Other Important Information - Depreciation and amortization expense declined to $5.3 million compared to $10.3 million in the prior year, primarily due to practice dispositions [10] - Interest income on cash balances contributed to strong performance in investments and other income, which is expected to remain favorable [48] Q&A Session Summary Question: Updated thoughts on guidance - Management stated that initial guidance was conservative due to uncertainty, but first quarter results exceeded expectations, prompting an upward revision [16] Question: Concerns regarding economic conditions - Management noted that there are many changes in the economy and administration, leading to a more difficult economic environment [18][19] Question: Hospital contracted subsidies - Subsidies have always been part of the business and continue to be a normal aspect of partnerships with hospitals [24][25] Question: Seasonality expectations - Management does not foresee any changes in seasonality for 2025 and is not concerned about changes affecting the numbers [27][28] Question: Collections and DSO - Management indicated that there are no concerns regarding DSO or accounts receivable, and collections are improving [29][30] Question: Potential hospital contract wins - Management believes that focusing on strong partnerships and reliability will lead to growth opportunities in hospital contracts [35][36] Question: Update on divestitures and acquisitions - Management is comfortable with the current portfolio and sees favorable conditions for acquisitions, indicating potential opportunities in the market [43][44]

Financial Data and Key Metrics Changes - Adjusted net investment income (NII) was $45,000,000 or $0.54 per share for fiscal Q1, down slightly from $0.55 per share in the prior quarter [9][30] - Net asset value (NAV) per share declined to $17.63 from $18.09 last quarter [9][30] - Total debt outstanding was $1,610,000,000 with a weighted average interest rate of 6.2%, down from the previous quarter [32][33] Business Line Data and Key Metrics Changes - The portfolio had a fair value of $2,800,000,000 invested across 136 companies, with a weighted average yield on debt investments at 10.7% [12] - 82% of the portfolio is now in 1st lien position, up from 78% a year ago [12] - The median EBITDA of portfolio companies was $142,000,000 with a median leverage of 5.4 times [13] Market Data and Key Metrics Changes - The company originated $198,000,000 of new investment commitments with a weighted average yield of 9.6%, a slight decline from the previous quarter [23] - Paydowns, exits, and sales in Q1 generated $352,000,000, up from $338,000,000 in the fourth quarter [24] - The company noted that competition between broadly syndicated loans and private credit drove spreads lower, which are now stabilizing [20][21] Company Strategy and Development Direction - The company amended its dividend policy to include a base dividend of $0.40 per share and a supplemental dividend of $0.07 per share [7][8] - The equity raise of $100,000,000 is expected to help grow the asset base and diversify the portfolio [5][33] - The management emphasized a focus on investing in larger companies and strong sectors to further diversify the portfolio [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the current environment but expressed optimism about increased deal flow in 2025 due to favorable regulatory conditions and private equity activity [20][21] - The company remains committed to addressing troubled assets and converting them into performing credit assets [54] - Management believes that the current market environment presents attractive investment opportunities [40][66] Other Important Information - The company has a liquidity of approximately $1,100,000,000, including $113,000,000 in cash and $958,000,000 in undrawn capacity on credit facilities [33] - The company reported a $700,000 dividend from the Kemper joint venture [34] Q&A Session Summary Question: Inquiry about the $100,000,000 equity investment and future plans - Management clarified that the investment was made at NAV with a standard lockup provision, allowing for significant dry powder for future investments [38][39] Question: Discussion on the strategic shift towards larger company direct lending - Management explained that the focus on first lien lending is due to better risk-adjusted returns in the current market environment [41][46] Question: Options for upcoming debt maturity - Management indicated that they are considering all options, leveraging existing liquidity and facilities [50] Question: Goals for the company with the new dividend and fee structure - Management stated the goal is to cover the dividend comfortably, grow the asset base, and convert non-performing assets into income-generating assets [52][54] Question: Clarification on supplemental dividend levels - Management indicated that approximately 50% of excess earnings above the base dividend would be paid out as supplemental dividends [58] Question: Rationale for buying back shares at NAV - Management explained that purchasing at NAV allows for asset growth and diversification rather than simply buying shares at a discount [65][66]