RWAYL — Runway Growth Finance Corp. - 7

Summary of RWAYL Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Total Investment Income: $30 million, down from $36.7 million in Q4 2024.
• Net Investment Income (NII): $11.6 million, a decrease from $15.7 million in Q4 2024.
• NII per Share: $0.32, compared to a base dividend of $0.33 per share.
• Portfolio Fair Value: $927.4 million, a 2% decline from $946 million in Q4 2024.
• Weighted Average Portfolio Risk Rating: Increased to 2.45 from 2.42.
• Debt Portfolio Yield: 14.2%, down from 16.8% quarter-over-quarter.
• Net Assets: $484.9 million, down from $489.5 million at the end of 2024.
• NAV per Share: $13.42, a 1% decrease from $13.55 at the end of 2024.

2. Strategic Updates and Business Highlights

• Completed seven investments totaling $42.9 million in Q4, focusing on technology, healthcare, and consumer sectors.
• Announced the pending acquisition of SWK Holdings, expected to close in early April 2026, aimed at diversifying the portfolio and enhancing capabilities in healthcare and life sciences.
• Emphasized a disciplined investment approach, focusing on first-lien senior secured loans and maintaining a conservative risk profile.
• Noted a strong pipeline for 2026, bolstered by partnerships with BC Partners and SWK, with expectations for continued deal flow.

3. Forward Guidance and Outlook

• Anticipated stronger origination activity in Q1 2026 compared to the previous year, despite it being seasonally slow.
• The SWK acquisition is expected to stabilize the asset base and enhance earnings power, with projected mid-single-digit NII accretion post-transaction.
• Expected leverage ratio post-SWK acquisition to be just under 1.2x, with a target range of 1.2x to 1.3x moving forward.

4. Bad News, Challenges, or Points of Concern

• Declining Metrics: Notable decreases in total investment income and net investment income compared to the previous year.
• Prepayment Fee Income: Returned to normalized levels, contributing to the decline in NII.
• Market Conditions: Ongoing uncertainties related to interest rates, economic conditions, and competitive pressures in the private market may impact future performance.
• Portfolio Risk: The weighted average risk rating has increased, indicating a potential rise in credit risk.

5. Notable Q&A Insights

• Pipeline Strength: Management expressed optimism about a stronger pipeline due to BC Partners' influence, with expectations of at least one deal per quarter.
• Competitive Landscape: The current market has fewer providers, which may benefit Runway by increasing deal flow.
• SWK Portfolio Details: The SWK transaction will involve 13 loans with a fair value of approximately $235 million, expected to enhance the overall portfolio yield.
• Share Repurchase Program: Management indicated plans to revisit share repurchases post-acquisition, contingent on market conditions and capital allocation strategies.
• Market Reactions: Concerns were raised regarding the potential dilution from the SWK deal, but management reassured that the overall impact would be manageable.

This summary encapsulates the key points from the earnings call, highlighting both the financial performance and strategic direction of Runway Growth Finance Corp.