Horizon Finance (HRZN) Q4 2025 earnings summary

Executive summary

• 2025 marked a transformative year, with groundwork laid for long-term growth despite macro and micro challenges, including a delayed merger with MRCC due to a government shutdown.

• Leading provider of secured loans to venture-backed growth stage and public companies in technology, life sciences, healthcare technology, and sustainability sectors.

• Focus on generating attractive risk-adjusted returns through directly originated secured loans and capital appreciation via warrants.

• Portfolio growth resumed in Q4 with $102.5 million in new loans funded and a robust investment pipeline, with high demand for venture debt capital anticipated to continue into 2026.

• Pending merger with Monroe Capital Corporation, approved by shareholders, is expected to provide significant additional equity capital and enable larger venture loans.

Financial highlights

• Net investment income (NII) for Q4 2025 was $0.18 per share; NAV per share ended at $6.98.

• Portfolio yield on debt investments was 14.3% for Q4 and 15.8% for the full year, among the highest in the BDC industry.

• Debt portfolio size reached $647.2 million as of December 31, 2025.

• Investment income for Q4 was $21 million, down from $24 million year-over-year, mainly due to lower interest income.

• Cumulative distributions per share since IPO totaled $20.64.

Outlook and guidance

• Board declared regular monthly distributions of $0.06 per share for April, May, and June 2026, aiming to deliver NII at or above declared distributions.

• Expectation to generate NII that covers distributions over time, supported by portfolio growth and predictive pricing.

• Advisor agreed to waive up to $4 million in fees over four quarters post-merger to support distributions.

• Ample growth opportunities with a robust investment pipeline in dynamic markets and a large addressable market for venture debt, estimated at $51 billion.

• Long-term growth catalysts include a growing investment pipeline, increasing leverage, substantial capacity, and future warrant upside.