Horizon Technology Finance Announces Fourth Quarter and Full Year 2025 Financial Results

– Fourth Quarter 2025 Net Investment Income per Share of $0.18; NAV per Share of $6.98 –

– Debt Portfolio Yield of 14.3% –

– HRZN Ends Year with Committed Backlog of $154 Million –

FARMINGTON, Conn.–(BUSINESS WIRE)–Horizon Technology Finance Corporation (NASDAQ: HRZN) (“Horizon” or the “Company”), an affiliate of Monroe Capital, today announced its financial results for the fourth quarter and full year ended December 31, 2025.

Fourth Quarter 2025 and Recent Highlights

• Net investment income (“NII”) of $8.3 million, or $0.18 per basic share, compared to $10.4 million, or $0.27 per basic share for the prior-year period
• Total investment portfolio of $647.2 million as of December 31, 2025
• Net asset value of $318.5 million, or $6.98 per share as of December 31, 2025
• Annualized portfolio yield on debt investments of 14.3% for the quarter
• Funded nine loans totaling $102.5 million
• Experienced liquidity events from three portfolio companies
• Cash of $142.7 million and credit facility capacity of $329.0 million as of December 31, 2025
• Held portfolio of warrant and equity positions in 89 companies as of December 31, 2025
• Undistributed spillover income of $0.65 per share as of December 31, 2025
• Subsequent to quarter end, declared distributions of $0.06 per share payable in April, May and June 2026

Full Year 2025 Highlights

• Net investment income of $44.4 million, or $1.05 per share for 2025, compared to $47.8 million, or $1.32 per share for the prior year
• Achieved annual portfolio yield on debt investments of 15.8% for 2025
• Horizon funded 28 loans totaling $277.5 million; experienced liquidity events from 23 portfolio companies

“We returned to portfolio growth in the fourth quarter via a number of high-quality new venture debt loans while we made progress toward our planned merger with Monroe Capital Corporation (‘MRCC’),” said Mike Balkin, Chief Executive Officer of Horizon. “NII was impacted in the quarter by lower prepayment activity, while NAV per share was modestly lower due to our distributions paid in the fourth quarter exceeding our NII. Our Board declared a monthly distribution of $0.06 per share for each of April, May and June, which we believe aligns our distribution level with our anticipated NII and operating results for 2026, taking into account the expected impact of the anticipated merger with MRCC.”

“In terms of our portfolio, we were pleased to increase our committed backlog during the quarter, which we believe sets a foundation to lead to steady portfolio growth in 2026,” added Mr. Balkin. “As we move ahead, we remain excited to complete the merger with MRCC, which will provide us significant capital to invest and, along with our active relationship with Monroe Capital, will better position us to win larger venture lending transactions. This will allow us to enhance our NII and NAV over time, which will ultimately create long-term value for our shareholders.”

Fourth Quarter 2025 Operating Results

Total investment income for the quarter ended December 31, 2025 was $20.7 million, compared to $23.5 million for the quarter ended December 31, 2024, primarily due to lower interest income on debt investments from a smaller debt investment portfolio.

The Company’s dollar-weighted annualized yield on average debt investments for the quarter ended December 31, 2025 and 2024 was 14.3% and 14.9%, respectively. The Company calculates the dollar-weighted annualized yield on average debt investments for any period measured as (1) total investment income (excluding dividend income) during the period divided by (2) the average of the fair value of debt investments outstanding on (a) the last day of the calendar month immediately preceding the first day of the period and (b) the last day of each calendar month during the period. The dollar-weighted annualized yield on average debt investments is higher than what investors will realize because it does not reflect expenses or any sales load paid by investors.

Total expenses for the quarter ended December 31, 2025 were $12.5 million, compared to $12.8 million for the quarter ended December 31, 2024. The decrease was primarily due to a $0.2 million decrease in interest expense and a $0.2 million decrease in base management fee due to a lower average weighted size of the portfolio in the quarter.

Net investment income for the quarter ended December 31, 2025 was $8.3 million, or $0.18 per basic share, compared to $10.4 million, or $0.27 per basic share, for the quarter ended December 31, 2024.

For the quarter ended December 31, 2025, net realized loss on investments was $23.3 million, or $0.52 per basic share, compared to a net realized loss on investments of $3.2 million, or $0.08 per basic share, for the quarter ended December 31, 2024. For the quarter ended December 31, 2025, net realized loss on extinguishment of debt was $0.8 million, or $0.02 per basic share.

For the quarter ended December 31, 2025, net unrealized appreciation on investments was $24.7 million, or $0.55 per basic share, compared to net unrealized depreciation on investments of $19.6 million, or $0.51 per basic share, for the prior-year period.

Full Year 2025 Operating Results

Total investment income for the year ended December 31, 2025 was $96.0 million, compared to $99.9 million for the year ended December 31, 2024.

Horizon’s dollar-weighted annualized yield on average debt investments for the year ended December 31, 2025 and 2024 was 15.8% and 15.6%, respectively.

For the full year ended December 31, 2025, net investment income was $44.4 million, or $1.05 per basic share, compared to net investment income of $47.8 million, or $1.32 per basic share, in the prior year.

For the full year ended December 31, 2025, net realized loss on investments was $55.1 million, or $1.30 per basic share, compared to net realized loss on investments of $34.6 million, or $0.96 per basic share, for the full year ended December 31, 2024. For the full year ended December 31, 2025, net realized loss on extinguishment of debt was $2.8 million, or $0.07 per basic share.

For the full year ended December 31, 2025, net unrealized appreciation on investments was $10.9 million, or $0.26 per basic share, compared to net unrealized depreciation on investments of $18.8 million, or $0.52 per basic share, for the full year ended December 31, 2024.

Portfolio Summary and Investment Activity

As of December 31, 2025, the Company’s debt portfolio consisted of 38 secured loans with an aggregate fair value of $596.0 million. In addition, the Company’s total warrant, equity and other investments in 97 portfolio companies had an aggregate fair value of $51.2 million. Total portfolio investment activity for the three months and full year ended December 31, 2025 and 2024 was as follows:

Portfolio Asset Quality

The following table shows the classification of Horizon’s loan portfolio at fair value by internal credit rating as of December 31, 2025, September 30, 2025 and December 31, 2024:

As of December 31, 2025, September 30, 2025 and December 31, 2024, Horizon’s loan portfolio had weighted average credit ratings of 2.9, 2.9 and 3.1, respectively, with 4 being the highest credit quality rating and 3 being the rating for a standard level of risk. A rating of 2 represents an increased level of risk and, while no loss is currently anticipated for a 2-rated loan, there is potential for future loss of principal. A rating of 1 represents deteriorating credit quality and high degree of risk of loss of principal.

As of December 31, 2025, there were four debt investments with an internal credit rating of 1, with an aggregate cost of $33.8 million and an aggregate fair value of $24.5 million. As of September 30, 2025, there were four debt investments with an internal credit rating of 1, with an aggregate cost of $61.3 million and an aggregate fair value of $29.3 million. As of December 31, 2024, there were four debt investments with an internal credit rating of 1, with an aggregate cost of $44.8 million and an aggregate fair value of $10.5 million.

Liquidity and Capital Resources

As of December 31, 2025, the Company had $189.2 million in available liquidity, consisting of $142.7 million in cash and money market funds, and $46.5 million in funds available under existing credit facility commitments.

As of December 31, 2025, there was no outstanding principal balance under the $150.0 million revolving credit facility (“Key Facility”). The Key Facility allows for an increase in the total loan commitment up to an aggregate commitment of $300.0 million. There can be no assurance that any additional lenders will make any commitments under the Key Facility.

As of December 31, 2025, there was $181.0 million in outstanding principal balance under the $250 million senior secured debt facility with a large U.S.-based insurance company at an interest rate of 6.57%.

Additionally, as of December 31, 2025, there was $90.0 million in outstanding principal balance under the $200 million senior secured credit facility with a large U.S.-based insurance company at an interest rate of 7.21%.

On October 17, 2024, the Company entered into a note purchase agreement, by and among the Company, and each purchaser named therein, in connection with the issuance and sale of $20.0 million aggregate principal of the Company’s 7.125% convertible notes due 2031 (the “2031 Convertible Notes”). As of December 31, 2025, the aggregate outstanding principal balance of the 2031 Convertible Notes was $2.8 million.

On September 4, 2025, the Company entered into a note purchase agreement, by and among the Company, and each purchaser named therein, in connection with the issuance and sale of $40.0 million aggregate principal of the Company’s 5.50% convertible notes due 2030 (the “2030 Convertible Notes”). During the quarter ended December 31, 2025, the holders of a portion of the 2030 Convertible Notes converted $8.5 million in outstanding principal of the 2030 Convertible Notes plus accrued but unpaid interest on such outstanding principal as of the conversion date into 1,197,288 shares of common stock at a weighted average conversion price of $7.11, together with cash in lieu of fractional shares, in accordance with noteholder conversion notice. As of December 31, 2025, the aggregate outstanding principal balance of the 2030 Convertible Notes was $31.5 million.

As of December 31, 2025, the Company’s net debt to equity leverage ratio was 105%, below the Company’s 120% targeted leverage. The asset coverage ratio for borrowed amounts was 167%.

Liquidity Events

During the quarter ended December 31, 2025, Horizon experienced liquidity events from three portfolio companies. Liquidity events for Horizon may consist of the sale of warrants or equity in portfolio companies, loan prepayments, sale of owned assets or receipt of success fees.

In December, with the proceeds of a new loan from HRZN, a portfolio company paid its outstanding principal balance of $17.5 million on its venture loan, plus interest and end-of-term payment. HRZN continues to hold warrants in the company.

In December, with the proceeds of a new loan from HRZN, a portfolio company paid its outstanding principal balance of $15.0 million on its venture loan, plus interest and end-of-term payment. HRZN continues to hold equity in the company.

In December, as a result of an acquisition, a portfolio company paid its outstanding principal balance of $10.0 million on its venture loan, plus interest, end-of-term payment, prepayment fee and proceeds in connection from the redemption of warrants.

Net Asset Value

At December 31, 2025, the Company’s net assets were $318.5 million, or $6.98 per share, compared to $336.2 million, or $8.43 per share, as of December 31, 2024.

For the quarter ended December 31, 2025, net increase in net assets resulting from operations was $8.8 million, or $0.20 per basic share, compared to a net decrease in net assets resulting from operations of $12.4 million, or ($0.32) per basic share, for the quarter ended December 31, 2024.

Stock Repurchase Program

During the quarter ended December 31, 2025, the Company did not repurchase any shares of its common stock. From the inception of the stock repurchase program through December 31, 2025, the Company has repurchased 167,465 shares of its common stock at an average price of $11.22 on the open market at a total cost of $1.9 million.

Recent Developments

On January 12, 2026, the Company funded a $30.0 million debt investment to a new portfolio company, Pelthos Therapeutics, Inc.

On January 20, 2026, the Company funded a $20.0 million debt investment to a new portfolio company, Ossio, Inc.

Between January 7 and February 13, 2026, the holders of a portion of the 2030 Convertible Notes converted $15.1 million in outstanding principal of the 2030 Convertible Notes plus accrued but unpaid interest on such outstanding principal as of the conversion date into 2,118,250 shares of common stock at a conversion price of $7.12 per share, together with cash in lieu of fractional shares.

On January 16, 2026, the Company distributed the investment held by HIMV LLC to Horizon Technology Finance Corporation. On January 27, 2026, the Company dissolved HIMV LLC.

On January 27, 2026, the Company borrowed $20.0 million on the Key Facility.

On January 28, 2026, the Company redeemed the outstanding principal balance of its 4.875% Notes due 2026 (the “2026 Notes”) plus accrued interest. The Company accelerated $0.1 million of unamortized debt issuance costs related to the 2026 Notes.

On February 6, 2026, the Company amended its Key Facility, to amend certain provisions regarding eligibility of debt investments and concentration limits.

Monthly Distributions Declared in First Quarter 2026

On February 27, 2026, the Company’s Board declared monthly distributions of $0.06 per share payable in each of April, May and June 2026. The following tables show these monthly distributions, which total $0.18 per share:

Monthly Distributions

After paying distributions of $1.32 per share deemed paid for tax purposes in 2025, declaring on October 22, 2025 a distribution of $0.11 per share payable January 15, 2026, and taxable earnings of $1.07 per share in 2025, the Company’s undistributed spillover income as of December 31, 2025 was $0.65 per share. Spillover income includes any ordinary income and net capital gains from the preceding tax years that were not distributed during such tax years.

Horizon’s Board sets the level of distributions for each quarter based on its results of operations, spillover income and longer-term outlook, including expected operating results for the current fiscal year, taking into account the expected impact of the Company’s anticipated merger with Monroe Capital Corporation. When declaring distributions, Horizon’s board of directors reviews estimates of taxable income available for distribution, which may differ from consolidated net income under generally accepted accounting principles due to (i) changes in unrealized appreciation and depreciation, (ii) temporary and permanent differences in income and expense recognition, and (iii) the amount of spillover income carried over from a given year for distribution in the following year. The final determination of taxable income for each tax year, as well as the tax attributes for distributions in such tax year, will be made after the close of the tax year.

Conference Call

The Company will host a conference call on Wednesday, March 4, 2026 at 9:00 a.m. ET to discuss its latest corporate developments and financial results. To participate in the call, please dial (877) 407-9716 (domestic) or (201) 493-6779 (international). The access code for all callers is 13758135. The Company recommends joining the call at least 5 minutes in advance. In addition, a live webcast will be available on the Company’s website at www.horizontechfinance.com.

A webcast replay will be available on the Company’s website for 30 days following the call.

About Horizon Technology Finance

Horizon Technology Finance Corporation (NASDAQ: HRZN), externally managed by Horizon Technology Finance Management LLC, an affiliate of Monroe Capital, is a leading specialty finance company that provides capital in the form of secured loans to venture capital and private equity-backed companies and publicly traded companies in the technology, life science, healthcare information and services, and sustainability industries. The investment objective of Horizon is to maximize its investment portfolio’s return by generating current income from the debt investments it makes and capital appreciation from the warrants it receives when making such debt investments. Horizon is headquartered in Farmington, Connecticut, with a regional office in Pleasanton, California, and investment professionals located throughout the U.S. Monroe Capital is a premier asset management firm specializing in private credit markets across various strategies, including direct lending, technology finance, venture debt, opportunistic, structured credit, real estate and equity. To learn more, please visit horizontechfinance.com.

Forward-Looking Statements

Some of the statements in this communication constitute forward-looking statements because they relate to future events, future performance or financial condition of Monroe Capital Corporation (“MRCC”) or Horizon Technology Finance Corporation (“HRZN”) or the proposed sale of assets by MRCC to Monroe Capital Income Plus Corporation (“MCIP”) and the proposed merger of MRCC with and into HRZN. All statements, other than historical facts, including but not limited to statements regarding the expected timing of the closing of the proposed transactions; the ability of the parties to complete the proposed transactions considering the various closing conditions; the expected benefits of the proposed transactions such as improved operations, enhanced revenues and cash flow, growth potential, market profile and financial strength; the competitive ability and position of the surviving companies following completion of the proposed transactions; and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual events and results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Certain factors could cause actual results and conditions to differ materially from those projected, including, without limitation, the uncertainties associated with (i) the timing or likelihood of the proposed transactions closing; (ii) the expected synergies and savings associated with the proposed transactions; (iii) the ability to realize the anticipated benefits of the proposed transactions; (iv) the possibility that one or more of the various closing conditions to the transactions may not be satisfied or waived on a timely basis or otherwise, including risks that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed transactions, may require conditions, limitations or restrictions in connection with such approvals or that the required approvals by the shareholders of MRCC and/or HRZN may not be obtained; (v) the possibility that competing offers or acquisition proposals will be made; (vi) risks related to diverting management’s attention from ongoing business operations; (vii) the combined company’s plans, expectations, objectives and intentions, as a result of the transactions; (viii) the future operating results and net investment income or distribution projections of MRCC, HRZN or, following the closing of the transactions, the combined company; (ix) the ability of Horizon Technology Finance Management LLC (“HTFM”) to implement its future plans with respect to the combined company; (x) the expected financings and investments and additional leverage that MRCC, HRZN or, following the closing of the transactions, the combined company may seek to incur in the future; (xi) the adequacy of the cash resources and working capital of MRCC, HRZN or, following the closing of the transactions, the combined company; (xii) the risk that shareholder litigation in connection with the proposed transactions may result in significant costs of defense and liability; (xiii) changes in the economy, financial markets and political environment, including the impacts of inflation and interest rates; (xiv) risks associated with possible disruption in the operations of MRCC and/or HRZN or the economy generally due to terrorism, war or other geopolitical conflict, natural disasters, tariffs or public health crises and epidemics; (xv) future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); (xvi) conditions in MRCC’s and HRZN’s operating areas, particularly with respect to business development companies or regulated investment companies; and (xvii) other considerations that may be disclosed from time to time in MRCC’s and HRZN’s publicly disseminated documents and filings.

Contacts

Investor Relations:

ICR

Garrett Edson

[email protected]
(646) 200-8885

Media Relations:

ICR

Chris Gillick

[email protected]
(646) 677-1819

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