Horizon Technology Finance ((HRZN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Horizon Technology Finance Corporation showcased a strong financial performance, underscored by successful capital raising initiatives and strategic growth plans through the anticipated merger with MRCC. Despite these positive developments, the call also highlighted challenges such as a decrease in portfolio size and high prepayment activity, which could impact future yield sustainability.
Merger Announcement with MRCC
Horizon Technology Finance Corporation announced a significant merger with MRCC, expected to close in early 2026. This strategic move is anticipated to substantially increase the company’s assets under management, providing greater economies of scale and enhancing its competitive position in the market.
Net Investment Income Growth
The company reported a notable increase in net investment income, reaching $0.32 per share, up from $0.28 in the previous quarter. This growth reflects Horizon’s effective management and strategic investment decisions, contributing to its robust financial performance.
Strong Portfolio Yield
Horizon achieved an impressive portfolio yield on debt investments of 18.6%, positioning it among the highest in the Business Development Company (BDC) industry. This high yield underscores the company’s ability to generate substantial returns from its investment activities.
Successful Capital Raising
The company successfully raised $40 million through the issuance of 5.5% unsecured convertible notes due 2030, alongside an additional $10 million in equity through the ATM program. These capital raising efforts are crucial for supporting Horizon’s growth initiatives and maintaining financial flexibility.
Decrease in Portfolio Size
Horizon experienced a decrease in its net investment portfolio, which declined to $585 million as of September 30, from $636 million as of June 30, 2025. This reduction highlights a challenge for the company, as it seeks to manage its portfolio size effectively while pursuing growth opportunities.
Undistributed Spillover Income
As of September 30, Horizon’s undistributed spillover income stood at $0.93 per share, indicating a potential risk of over-distribution. This situation requires careful management to ensure sustainable dividend payments and financial stability.
Prepayment Activity
The company faced high prepayment activity, with $61 million in principal prepayments. This trend could impact the sustainability of Horizon’s yield, necessitating strategic adjustments to maintain its financial performance.
Forward-Looking Guidance
During the earnings call, Horizon provided significant guidance on its strategic direction and financial outlook. The company declared a net investment income of $0.32 per share and announced an increase in net asset value per share by 5% to $7.12. Monthly distributions of $0.11 per share were declared through March 2026. The impending merger with MRCC is expected to enhance assets under management and leverage Monroe Capital’s support for larger venture loans. Horizon remains focused on originating larger loans, maintaining strong liquidity, and expanding its robust pipeline for sustainable growth.
In conclusion, Horizon Technology Finance Corporation’s earnings call reflected a positive sentiment, driven by strong financial performance and strategic growth initiatives. The merger with MRCC and successful capital raising efforts are poised to enhance the company’s market position, despite challenges such as portfolio size reduction and high prepayment activity. Investors and stakeholders will be keenly watching Horizon’s execution of its strategic plans and its impact on future financial performance.