RWAYZ — Runway Growth Finance Corp. 8.00% Notes due 2027

Summary of Runway Growth Finance (RWAYZ) Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Total Investment Income: $36.7 million, up from $35.1 million in Q2 2025.
• Net Investment Income: $15.7 million, an increase from $13.9 million in Q2 2025.
• Weighted Average Portfolio Risk Rating: Increased to 2.42 from 2.33 in Q2 2025.
• Loan-to-Value Ratio: Rose to 31.4% from 29.6% in Q2 2025.
• Total Investment Portfolio Fair Value: Decreased to $946 million from $1.02 billion in Q2 2025.
• NAV per Share: Decreased to $13.55 from $13.66 in Q2 2025.
• Operating Expenses: $21 million, slightly down from $21.2 million in Q2 2025.
• Net Realized Loss on Investments: $1.3 million, an improvement from a $1.5 million loss in Q2 2025.
• Debt Portfolio Yield: Increased to 16.8% from 15.4% in Q2 2025.

2. Strategic Updates and Business Highlights

• Completed 11 investments totaling $128.3 million in Q3 2025 across technology, healthcare, and consumer sectors.
• Announced a definitive merger agreement to acquire SWK Holdings, expected to enhance portfolio scale by approximately $242 million and diversify investments in healthcare and life sciences.
• The merger is structured as a NAV for NAV transaction, with an estimated purchase price of $220 million, including cash and stock considerations.
• The integration of SWK is anticipated to enhance earnings power and provide a more diversified asset base.

3. Forward Guidance and Outlook

• The merger with SWK is expected to be accretive to net investment income in the first full quarter post-closing, projected for early 2026 due to potential delays from the government shutdown.
• Anticipated mid-single-digit run rate net investment income accretion post-merger, with improved dividend coverage and return on equity.
• The company expects to maintain its base dividend of $0.33 per share, supported by spillover income of approximately $0.53 per share.

4. Bad News, Challenges, or Points of Concern

• Portfolio Fair Value Decline: The total investment portfolio's fair value decreased by 7.7%, raising concerns about asset performance.
• Increased Loan-to-Value Ratio: A rise in the loan-to-value ratio may indicate higher risk exposure.
• Repayment Activity: Elevated repayments in Q3 2025 may lead to a muted origination environment in Q4 2025.
• Competitive Pressures: Noted spread compression in the venture debt space, although less severe than in broader markets.
• Realized Losses: Losses primarily stemmed from the equity portfolio, with no significant sector-wide themes identified, indicating idiosyncratic issues.

5. Notable Q&A Insights

• Origination and Repayment Outlook: Management expects a muted repayment environment in Q4 2025, with origination activity continuing through the BC Partners Credit platform.
• Integration of SWK: The SWK team will assist in transitioning their portfolio and origination during the integration period.
• Dividend Strategy: The decision to maintain the dividend at $0.33 per share reflects anticipated earnings power and prepayment-related income considerations.
• Loan Characteristics: SWK targets growth-stage companies similar to Runway's focus, indicating strategic alignment in investment philosophy.

Overall, Runway Growth Finance's Q3 2025 results reflect a proactive approach to portfolio management and strategic growth through the acquisition of SWK Holdings, despite facing challenges related to portfolio valuation and competitive pressures in the market.