Horizon's Debt Yield Falls as NAV Drops to $5.56

The Tip Desk · November 5, 2026 · 4 min read

Net investment income was $12.3 million, or $0.19 a share, as the company funded nine loans totaling $98.4 million and booked $29.1 million of unrealized depreciation.

Horizon Technology Finance Corporation (HRZN) reported net investment income of $12.3 million, or $0.19 a basic share, for the third quarter ended September 30, 2026, up from $7.4 million, or $0.11 a share, in the second quarter, which included $0.07 a share of non-recurring merger expenses.

The specialty finance company, an affiliate of Monroe Capital, said the dollar-weighted annualized yield on average debt investments was 14.7%, down from 18.6% a year earlier. It attributed the year-over-year decline primarily to recognition and capitalization of accrued, previously unrecorded interest on two investments that left non-accrual in the year-ago quarter. Total investment income was $24.1 million, which the company said was lower than $26.3 million a year earlier primarily because of lower interest income on debt investments.

Net asset value fell to $362.1 million, or $5.56 a share, from $417.5 million, or $6.23 a share, at June 30, 2026. The net decrease in net assets from operations was $28.2 million, or $0.43 a basic share. Net unrealized results flipped to a $29.1 million depreciation, or $0.44 a share, from $40.5 million of appreciation, or $0.94 a share, a year earlier. Chief Executive Officer Mike Balkin said stressed debt investments continued to impact NAV per share.

The total investment portfolio ended at $650.3 million. The company funded nine loans totaling $98.4 million and recorded $89.6 million of new debt and equity investments, compared with $37.7 million in the year-ago quarter. Early payoffs and principal paydowns were $80.9 million, versus $60.9 million a year earlier, and liquidity events came from six portfolio companies. The debt portfolio consisted of 42 secured loans with an aggregate fair value of $621.2 million. Warrant, equity and other investments in 95 companies, plus the joint venture, had an aggregate fair value of $29.1 million.

Committed, approved and awarded backlog grew 14% sequentially to $351 million at quarter-end. Balkin said the increase reflected sourcing of high-quality debt opportunities and the Monroe relationship. The company invested $8.3 million in the RoHo joint venture and recorded a $0.2 million net investment loss from that venture.

Under the 1-to-5 credit scale adopted June 30, 2026, the weighted average credit rating held at 2.3. Rating-5 loans increased to seven investments with $18.8 million of fair value from five investments with $31.3 million of fair value at June 30. Rating-4 loans rose to $54.9 million of fair value from $48.0 million.

Total net expenses were $11.5 million. The Advisor waived $1.0 million of base management fees as the first installment of a $4.0 million fee waiver running through the second quarter of 2027. Net realized loss on investments was $11.3 million, or $0.17 a share.

Cash declined to $107.8 million from $135.0 million at June 30. Available liquidity was $210.9 million, including $103.1 million under existing credit facilities. Net debt to equity leverage was 82%, below the 120% target; asset coverage for borrowed amounts was 189%. The company amended a $250.0 million senior secured credit facility to add a second class of notes and extend legal final maturity to June 2034, with $166.5 million of Class A notes at 6.72% and $14.5 million of Class B notes at 7.86%. A separate $150.0 million facility commitment was decreased by $50.0 million, with $90.0 million outstanding at 7.21%.

The company repurchased 2,033,991 shares at a weighted-average $4.90 for $10.0 million after the board raised the authorization to $20 million on August 3, 2026. Undistributed spillover income declined to $0.24 a share from $0.33 a share at June 30, after paying $0.27 a share of distributions against $0.19 a share of NII. Subsequent to quarter-end, the board declared $0.06 a share monthly distributions payable in January, February and March 2027, totaling $0.18 a share. Balkin said the company created a Chief Growth and Strategy Officer role at the Advisor and appointed Manuel Henriquez.