Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
The matters discussed in this Annual Report, as well as in future oral and written statements by management of Hercules Capital, Inc., that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties, including those discussed under “Item 1A. Risk Factors”, which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this report include statements as to:
• our current and future management structure;
• our future operating results;
• our business prospects and the prospects of our prospective portfolio companies;
• the impact of investments that we expect to make;
• our informal relationships with third parties including in the venture capital industry;
• the expected market for venture capital investments and our addressable market;
• the dependence of our future success on the general economy and its impact on the industries in which we invest;
• our ability to access debt markets and equity markets;
• the occurrence and impact of macro-economic developments (for example, tariffs and other trade or sanction issues, government shutdown, global pandemics, natural disasters, terrorism, international conflicts and war) on us and our portfolio companies;
• the ability of our portfolio companies to achieve their objectives;
• our expected financings and investments;
• our regulatory structure and tax status as a RIC;
• our ability to operate as a BDC and our subsidiaries ability to operate as SBICs;
• the impact of information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity attacks;
• the adequacy of our cash resources and working capital;
• the timing of cash flows, if any, from the operations of our portfolio companies;
• the timing, form and amount of any distributions;
• the impact of fluctuations in interest rates on our business;
• the valuation of any investments in portfolio companies, particularly those having no liquid trading market; and
• our ability to recover unrealized depreciation on investments.
You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Annual Report.
Use of Non-GAAP Measures
We present our financial condition and results of operations in the way we believe will be most meaningful and representative of our business results. Some of the measurements we use are “Non-GAAP financial measures” under SEC rules and regulations. GAAP is the acronym for “generally accepted accounting principles” in the United States. The Non-GAAP financial measures we present may not be comparable to similarly-named measures reported by other companies.
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Overview
We are a leading specialty finance company with a focus on providing financing solutions to high-growth and innovative venture capital-backed and institutional-backed companies in a variety of technology and life sciences industries. Our primary business objectives are to increase our net income, net investment income, and net asset value through our investments. We principally invest in debt securities and, to a lesser extent, warrant and equity securities, with a particular emphasis on Structured Debt. We aim to achieve our business objectives by maximizing our portfolio total return through generation of current income from our debt investments and capital appreciation from our warrant and equity investments. We expect that our investments will generally range from $25.0 million to $100.0 million, although we may make investments in amounts above or below this range. Through generation of current income from our debt investments and capital appreciation from our warrant and equity investments, we aim to maximize our portfolio total return.
Since inception through December 31, 2025, we have originated more than $ 25.0 billio n in commitments in ov er 700 co mpanies. We, through the Adviser Subsidiary, may also agree to manage certain other funds that invest in debt, equity or provide other financing or services to companies in a variety of industries for which we, through the Adviser Subsidiary may earn management or other fees for our services. As of December 31, 2025, we, including through our Adviser Subsidiary, actively manage more than $5.7 billion of assets.
We are structured as an internally managed, non-diversified, closed-end investment company that has elected to be regulated as a BDC under the 1940 Act. As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” which includes securities of private U.S. companies, cash, cash equivalents, and high-quality debt investments that mature in one year or less. Consistent with requirements under the 1940 Act, we invest primarily in United States based companies and to a lesser extent in foreign companies. We source our investments through our principal office located in San Mateo, CA, as w ell as through our additional offices in Boston, MA, New York, NY, San Diego, CA, Denver, CO, and London, United Kingdom.
We have elected to be treated for tax purposes as a RIC under the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC, among other requirements, we must maintain certain income, asset, and distribution requirements. As a RIC, we generally will not be subject to U.S. federal income tax on the income that we distribute (or are deemed to distribute) to our stockholders provided that we maintain our RIC status for a given year. See “Certain United States Federal Income Tax Considerations” for additional information.
Portfolio and Investment Activity
The total fair value of our investment portfolio as of December 31, 2025 and December 31, 2024 was as follows:
(in millions)
Fair Value
December 31, 2025
December 31, 2024
Debt
Equity
Warrants
Investment Funds & Vehicles
Total Investment Portfolio
Our investments in portfolio companies take a variety of forms, including unfunded contractual commitments and funded investments. Not all debt commitments represent future cash requirements. Unfunded contractual commitments depend upon a portfolio company reaching certain milestones before the debt commitment is available to the portfolio company, which is expected to affect our funding levels. These commitments are subject to the same underwriting and ongoing portfolio maintenance as the on-balance sheet financial instruments that we hold. Debt commitments generally fund over the year following the underwriting of such debt commitment. From time to time, unfunded contractual commitments may expire without being drawn and thus do not represent future cash requirements.
Prior to entering into a contractual commitment, we generally issue a non-binding term sheet to a prospective portfolio company. Non-binding term sheets are subject to completion of our due diligence and final investment committee approval process, as well as the negotiation of definitive documentation with the prospective portfolio companies. These non-binding term sheets generally convert to contractual commitments in approximately 90 days from signing and some portion may be assigned or allocated to or directly originated by the Adviser Funds prior to or after closing. Not all non-binding term sheets are expected to close and do not necessarily represent future cash requirements.
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Our portfolio activity for the years ended December 31, 2025 and 2024 was comprised of the following:
(in millions)
December 31, 2025
December 31, 2024
Investment Commitments (1)
Investment Commitments Originated by Hercules Capital and the Adviser Funds
Less: Commitments assigned to or directly committed by the Adviser Funds
Net Total Investment Commitments
Gross Debt Commitments Originated by Hercules Capital and the Adviser Funds
New portfolio company
Existing portfolio company
Sub-total
Less: Debt commitments assigned to or directly committed by the Adviser Funds
Net Total Debt Commitments
Investment Fundings (2)
Gross Debt Fundings by Hercules Capital and the Adviser Funds
New portfolio company
Existing portfolio company
Sub-total
Less: Debt fundings assigned to or directly funded by the Adviser Funds
Net Total Debt Fundings
Equity Investments and Investment Funds and Vehicles Fundings by Hercules Capital and the Adviser Funds
New portfolio company
Existing portfolio company
Sub-total
Less: Equity fundings assigned to or directly funded by the Adviser Funds
Net Total Equity and Investment Funds and Vehicle Fundings
Total Unfunded Contractual Commitments (3)
Non-Binding Term Sheets
New portfolio company
Existing portfolio company
Total
(1) Includes restructured loans and renewals in addition to new commitments.
(2) Funded amounts include borrowings on revolving facilities.
(3) Amount represents unfunded commitments, including undrawn revolving facilities, which are available at the request of the portfolio company. Amount excludes unfunded commitments which are unavailable due to the borrower having not met certain milestones. This ex cludes $96.2 million and $139.7 million of unfunded commitments as of December 31, 2025 and December 31, 2024, respectively, to portfolio companies related to loans assigned to or directly committed by the Adviser Funds.
We receive principal payments on our debt investment portfolio based on scheduled amortization of the outstanding balances. In additi on, we receive principal repayments for some of our loans prior to their scheduled maturity date. The frequency or volume of these early principal repayments may fluctuate significantly from period to period. During the year ended December 31, 2025, we received approximately $848.3 million in aggregate principal repayments. Approximately $37.1 million of the aggregate principal repayments related to scheduled principal payments and approximately $811.2 million were early princi pal repayments related to 48 portfolio companies. Additionally, during the year ended December 31, 2025, we received $54.5 million from the partial sale of three debt investments to external parties and sold four debt investments for $20.0 million to the Adviser Funds.
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Total portfolio investment activity (inclusive of unearned income and excluding activity related to taxes payable and escrow receivables) as of and for the years ended December 31, 2025 and 2024 was as follows:
(in millions)
December 31, 2025
December 31, 2024
Beginning Portfolio
New fundings and restructures
Fundings assigned to or directly funded by the Adviser Funds
Equity and warrants not related to current period fundings
Principal repayments received on investments
Early payoffs
Proceeds from the sale of debt investments
Proceeds from sale of equity and warrant investments
Paid-in-kind interest
Accretion of loan discounts
Net acceleration of loan discounts and loan fees due to early payoffs or restructures
New loan fees
Gain (loss) on investments due to sales or write offs
Net change in unrealized appreciation (depreciation)
Ending Portfolio
Additionally, we may hold investments in debt, warrant, or equity positions of portfolio companies that have filed a registration statement with the SEC in contemplation of a potential IPO. There can be no assurance that companies that have yet to complete their IPOs will do so in a timely manner or at all.
The following table presents certain additional selected information regarding our debt investment portfolio as of December 31, 2025 and December 31, 2024. This includes information on benchmark index rate floors which we have in place on all of our floating rate debt investments.
December 31, 2025
December 31, 2024
Number of portfolio companies with debt outstanding
Percentage of debt bearing a floating rate
Percentage of debt bearing a fixed rate
Weighted average core yield on debt investments (1)(3)
Weighted average effective yield on debt investments (2)(3)
Prime rate at the end of the period
Percentage of Prime rate linked debt investments
Weighted average floor rate bearing a Prime rate
Percentage of SOFR, SONIA and BSBY rate linked debt investments
Weighted average floor rate bearing a SOFR, SONIA or BSBY rate
(1) The core yield is a Non-GAAP financial measure. The core yield on our debt investments excludes the effects of fee and income accelerations attributed to early payoffs, restructuring, loan modifications, other one-time events, and includes income from expired commitments. Please refer to the “Portfolio Yield” section below for further discussion of this measure.
(2) The effective yield on our debt investments includes the effects of fee and income accelerations attributed to early payoffs, restructuring, loan modifications, and other one-time events. The effective yield is derived by dividing total investment income from debt investments by the weighted average earning investment portfolio assets outstanding during the year, excluding non-interest earning assets such as warrants and equity investments. Please refer to the “Portfolio Yield” section below for further discussion of this measure.
(3) The core and effective yields represent the weighted average yields for the three month periods ended December 31, 2025 and December 31, 2024. Please refer to the "Portfolio Yield" section below for further discussion of these measures.
Macroeconomic Market Developments
The capital markets are subject to fluctuations caused by various external factors such as changes in the inflationary environment, interest rate movements, concerns over slowing economic growth and possible global recession, changes to U.S. tariff and import/export regulations, uncertainty and disruption caused by geopolitical tensions and disruptions caused by government shutdowns, among other factors. These m acroeconomic developments are outside our control and could require us to adjust our plan of operations, and impact our financial position, results of operations or cash flows in the future. We monitor macroeconomic market developments and their related impact to our business, including impacts to our portfolio companies, employees, due diligence and underwriting processes, and the broader financial markets.
Our investment portfolio continues to be focused on industries and sectors that are generally expected to be more resilient to U.S. and global economic cycles. This includes being partially insulated from declining interest rates as all of
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our floating rate debt investments, which represent 97.9% and 97.4% of our debt portfolio as of December 31, 2025 and December 31, 2024, respectively, are subject to interest rate floors. While our portfolio is not immune to the impact of macroeconomic events, we believe we and our portfolio are well positioned to manage the current environment. Given the unpredictability and fluidity of the macroeconomic market, neither our management nor our Board is able to predict the full impact of the macroeconomic events on our business, future results of operations, financial position, or cash flows. For additional information, see “Part I - Item 1A. Risk Factors” in this Annual Report.
Income from Portfolio
We primarily generate revenue in the form of interest income, from our investments in debt securities, and fee income, which is primarily comprised of commitment and facility fees. Interest income is recognized in accordance with the contractual terms of the loan agreement to the extent that such amounts are expected to be collected. Fees generated in connection with our debt investments are recognized over the life of the loan or, in some cases, recognized as earned. In addition, we generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. We also generate revenue in the form of capital gains, if any, on warrants or other equity securities that we acquire from our portfolio companies.
As of December 31, 2025, our debt investments generally have a term of between two and five years and typically bear interest at a rate ranging from approximately 7% to approximately 14%. In addition to the cash yields received on our debt investments, in some instances, our d ebt investments may also include any of the following: exit fees, balloon payment fees, commitment fees, success fees, PIK provisions or prepayment fees which may be required to be included in income prior to receipt.
Interest on debt securities is generally payable monthly, with amortization of principal typically occurring over the term of the investment. In addition, our loans may include an interest-only period ranging from three to eighteen months or longer. In limited instances in which we choose to defer amortization of the loan for a period of time from the date of the initial investment, the principal amount of the debt securities and any accrued but unpaid interest become due at the maturity date.
Loan origination and commitment fees are generally received in full at the inception of a loan, are deferred and amortized into fee income as an enhancement to the related loan’s yield over the contractual life of the loan. We recognize nonrecurring fees amortized over the remaining term of the loan commencing in the quarter relating to specific loan modifications. As of December 31, 2025 and 2024, unamortized capitalized fee income was recorded as follows:
(in millions)
As of December 31,
Offset against debt investment cost
Deferred obligation contingent on funding or other milestone
Total Unamortized Fee Income
Loan exit fees to be paid at the termination of the loan are accreted into interest income over the contractual life of the loan. As of December 31, 2025 and 2024, loan exit fees receivable were recorded as follows:
(in millions)
As of December 31,
Included within debt investment cost
Deferred receivable related to expired commitments
Total Exit Fees Receivable
Additionally, we have debt investments in our portfolio that earn PIK interest. The PIK interest, computed at the contractual rate specified in each loan agreement, is recorded as interest income and added to the principal balance of the loan on specified capitalization dates. To maintain our status as a RIC, the non-cash PIK income must be distributed to stockholders with other sources of income in the form of dividend distributions even though we have not yet collected any cash from the borrower. Amounts necessary to pay these distributions may come from available cash or the l iquidation of certain investments. During the years ended December 31, 2025 and December 31, 2024, we recorded approximately $55.9 million and $51.3 million of PIK income, respectively.
Portfolio Yield
We report our financial results on a GAAP basis. We monitor the performance of our total investment portfolio and total debt portfolio using both GAAP and Non-GAAP financial measures. In particular, we evaluate performance through monitoring the portfolio yields as we consider them to be effective indicators, for both management and stockholders, of
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the financial performance of our total investment portfolio and total debt portfolio. The key metrics that we monitor with respect to yields are as described below:
• “Total Yield” - The total yield is derived by dividing GAAP basis “Total investment income” by the weighted average GAAP basis value of investment portfolio assets outstanding during the year, including non-interest earning assets such as warrants and equity investments at amortized cost.
• “Effective Yield” on total debt investments - The effective yield is derived by dividing GAAP basis “Total investment income” from debt investments (1) by the weighted average GAAP basis value of debt investment portfolio assets at amortized cost outstanding during the year.
• “Core Yield” on total debt investments – The core yield is a Non-GAAP financial measure. The core yield is derived by dividing “Core investment income” from debt investments by the weighted average GAAP basis value of debt investment portfolio assets at amortized cost outstanding during the year. “Core investment income” adjusts GAAP basis “Total investment income” from debt investments (1) to exclude fee and other income accelerations attributed to early payoffs, deal restructuring, loan modifications, and other one-time income events, but includes income from expired commitments.
Three Months Ended
December 31,
Year ended December 31,
Total Yield
Effective Yield (1)
Core Yield (Non-GAAP) (1)
(1) Yield calculated using “ Total investment income ” excluding bank interest, dividend income, and investment income from other assets for the three months and year ended December 31, 2025 and December 31, 2024.
We believe that these measures are useful for our stockholders as it provides further insight into the yield of our portfolio to allow a more meaningful comparison with our competitors. The reconciliation to calculate “Core investment income” from GAAP basis “Total investment income” are as follows:
(in thousands)
Three Months Ended
December 31,
Year ended December 31,
GAAP Basis:
Total investment income
Less: fee and income accelerations attributed to early payoffs, restructuring, loan modifications, and other one-time events except income from expired commitments
Non-GAAP Basis:
Core investment income
Less: bank interest income, dividend income, and other investment income from other assets
Core investment income from debt portfolio
We believe the Core Yield is useful for our investors as it provides the yield at which our debt investments are originated and eliminates one-off items that can fluctuate significantly from period to period, thereby allowing for a more meaningful comparison over time.
Although the Core Yield, a Non-GAAP financial measure, is intended to enhance our stockholders’ understanding of our performance, the Core Yield should not be considered in isolation from or as an alternative to the GAAP financial metrics presented. The aforementioned Non-GAAP financial measure may not be comparable to similar Non-GAAP financial measures used by other companies.
Another financial measure that we monitor is the total return for our investors, which was approximately 3.2% and 32.8% during the years ended December 31, 2025 and 2024, respectively. The total return equals the change in the ending market value over the beginning of the period price per share plus distributions paid per share during the period, divided by the beginning price assuming the distribution is reinvested on the date of the distribution. The total return does not reflect any sales load that may be paid by investors. See “Note 10 – Financial Highlights” included in the notes to our consolidated financial statements appearing elsewhere in this report.
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Portfolio Composition
Our portfolio companies are primarily privately held companies which are active in sectors characterized by high margins, high growth rates, consolidation, and product and market extension opportunities and, to a lesser extent, public companies active in those sectors.
The following table presents the fair value of our portfolio by industry sector as of December 31, 2025 and December 31, 2024:
(in thousands)
December 31, 2025
December 31, 2024
Investments at
Fair Value
Percentage of
Total Portfolio
Investments at
Fair Value
Percentage of
Total Portfolio
Application Software (1)
Drug Discovery & Development
Healthcare Services, Other
System Software (1)
Consumer & Business Services
All other industries (2)
Total
(1) Effective December 31, 2025, the former “Software” category has been separated into “Application Software” and “System Software”. Prior year amounts have been reclassified to conform to the current presentation.
(2) See “Note 4 – Investments” for complete list of industry sectors and corresponding amounts of investments at fair value as a percentage of the total portfolio. As of December 31, 2025, the fair value as a percentage of total portfolio does not exceed 5.0% for any individual industry sector other than “Application Software”, “Drug Discovery & Development”, “Healthcare Services, Other”, “System Software”, and “Consumer & Business Services”.
Industry and sector concentrations vary as new loans are recorded and loans are paid off. Investment income, consisting of interest, fees, and recognition of gains on equity and warrants or other equity interests, can fluctuate materially when a loan is paid off or a warrant or equity interest is sold. Investment income recognized in any given year can be highly concentrated in several portfolio companies.
For the years ended December 31, 2025 and 2024, our ten largest portfolio companies represented approximately 28.6% and 31.6%, respectively, of the total fair value of our investments in portfolio companies. As of December 31, 2025 and December 31, 2024, we had seven and six investments, respectively, that represented 5% or more of our net assets. As of December 31, 2025 and December 31, 2024, we had two and three equity investments, respectively, that represented 5% or more of the total fair value of our equity investments. These equity investments represented approximately 48.4% and 49.7% of the total fair value of our equity investments as of December 31, 2025 and December 31, 2024, respectively.
As of December 31, 2025 and 2024, approximately 97.9% and 97.4%, respectively, of the debt investment portfolio was priced at floating interest rates with a floor. Our interest rates use Prime, SOFR, or SONIA as benchmark index rates. Changes in these benchmark index rates may affect the interest income and the value of our investment portfolio for portfolio investments with floating rates.
Our investments in Structured Debt generally have detachable equity enhancement features in the form of warrants or other equity securities designed to provide us with an opportunity for capital appreciation. These features are treated as OID and are accreted in to interest income over the term of the loan as a yield enhancement. Our warrant coverage generally ranges from 3% to 20% of the principal amount invested in a portfolio company, with a strike price generally equal to the most recent equity financing round. As of December 31, 2025, we held warrants in 108 portfolio companies, with a fair value of approximately $41.1 million. The fair value of our warrant portfolio increased by approximately $10.6 million, as compared to a fair value of $30.5 million as of December 31, 2024, primarily related to the increase in fair value of the portfolio companies.
Our existing warrant holdings would require us to invest approximately $63.7 million to exercise such warrants as of December 31, 2025. Warrants may appreciate or depreciate in value depending largely upon the underlying portfolio company’s performance and overall market conditions. As attractive investment opportunities arise, we may exercise certain of our warrants to purchase stock, and could ultimately monetize our investments. Of the warrants that we have monetized since inception, we have realized multiples in the range of approximately 1.02x to 42.71x b ased on the historical rate of return on our investments. We may also experience losses from our warrant portfolio in the event that warrants are terminated or expire unexercised.
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Portfolio Grading
We use an investment grading system, which grades each debt investment on a scale of 1 to 5 to characterize and monitor our expected level of risk on the debt investments in our portfolio with 1 being the highest quality. The following table shows the distribution of our outstanding debt investments on the 1 to 5 investment grading scale at fair value as of December 31, 2025 and 2024, respectively:
(in thousands)
December 31, 2025
December 31, 2024
Investment Grading
Number of Companies
Debt Investments
at Fair Value
Percentage of
Total Portfolio
Number of Companies
Debt Investments
at Fair Value
Percentage of
Total Portfolio
Total
As of December 31, 2025 and December 31, 2024, our debt investments had a weighted average investment grading of 2.20 and 2.26 on a cost basis, respectively. Changes in a portfolio company's investment grading may be a result of changes in portfolio company's performance and/or timing of expected liquidity events. For instance, we may downgrade a portfolio company if it is not meeting our financing criteria or is underperforming relative to its respective business plan. We may also downgrade a portfolio company as it approaches a point in time when it will require additional equity capital to continue operations. Conversely, we may upgrade a portfolio company's investment grading when it is exceeding our financial performance expectations and/or is expected to mature/repay in full due to a liquidity event.
If macroeconomic events evolve and cause disruption in the capital markets and to businesses, we monitor and work with the management teams and stakeholders of our portfolio companies to navigate any significant market, operational, and economic challenges created by these events. This includes remaining proactive in our assessments of credit performance to manage potential risks across our investment portfolio.
Performing and Non-accrual Investments
The following table shows the amortized cost of our performing and non-accrual investments as of December 31, 2025 and December 31, 2024:
(in millions)
As of December 31,
Amortized Cost
Percentage of Total Portfolio at Amortized Cost
Amortized Cost
Percentage of Total Portfolio at Amortized Cost
Performing
Non-accrual
Total Investments
Debt investments are placed on non-accrual status when it is probable that principal, interest, or fees will not be collected according to contractual terms. When a debt investment is placed on non-accrual status, we cease to recognize interest and fee income until the portfolio company has paid all principal and interest due or demonstrated the ability to repay our current and future contractual obligations. We may choose not to apply the non-accrual status to a loan where the investment has sufficient collateral value t o collect all of the contractual amount due and is in the process of collection. Interest collected on non-accrual investments are generally applied to principal.
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Results of Operations
Our condensed consolidated operating results for the years ended December 31, 2025 and 2024, were as follows:
(in thousands, except per share data)
Year Ended December 31,
Total investment income
Total expenses
Net investment income
Net realized gain (loss):
Net change in unrealized appreciation (depreciation):
Net increase (decrease) in net assets resulting from operations
Net investment income before gains and losses per common share:
Basic
Change in net assets resulting from operations per common share:
Basic
Diluted
Our operating results can vary substantially from period to period due to various factors, including changes in the level of investments held, changes in our investment yields, recognition of realized gains and losses, and changes in net unrealized appreciation and depreciation, among other factors. As a result, comparison of the net increase (decrease) in net assets resulting from operations may not be meaningful.
Investment Income
Total investment income for the year ended December 31, 2025 was a pproximately $532.5 million as compared to approximately $493.6 million for the year ended December 31, 2024. In vestment income is primarily composed of interest income earned on our debt investments, fee income from commitments, facilities, and other loan related fees and dividend income.
Interest and Dividend Income
The following table summarizes the components of interest and dividend income for the years ended December 31, 2025 and 2024:
(in thousands)
Year Ended December 31,
Contractual interest income
Exit fee interest income
PIK interest income
Dividend income
Other investment income (1)
Total interest and dividend income
(1) Other investment income includes OID interest income and interest recorded on other assets.
Interest and dividend income for the year ended December 31, 2025 totaled appro ximately $507.9 million as compared to approximately $467.2 million for the year ended December 31, 2024. The increa se in interest and dividend income for the year ended December 31, 2025 as compared to the year ended December 31, 2024, is primarily attributable to an increase in the weighted average principal outstanding and dividend income distributions primarily from the Adviser Subsidiary. Partially offsetting income growth was the impact of declining core yield due to declining benchmark rates in 2025.
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Interest income is comprised of recurring interest income from the contractual servicing of loans and non-recurring interest income that is related to the acceleration of income due to early loan repayments and other one-time events during the period.
The following table summarizes recurring and non-recurring interest income and dividend income for the years ended December 31, 2025 and December 31, 2024:
(in thousands)
Year Ended December 31,
Recurring interest income
Non-recurring interest income
Dividend income
Total interest and dividend income
A portion of interest income is earned in the form of PIK interest. The following table shows the PIK-related activity for the years ended December 31, 2025 and 2024, at cost:
(in thousands)
Year Ended December 31,
Beginning PIK interest receivable balance
PIK interest income during the period
PIK capitalized as principal or converted to equity or other assets
Payments received from PIK loans
Realized gain (loss)
Ending PIK interest receivable balance
The increase in PIK interest income during the year ended December 31, 2025, as compared to the year ended December 31, 2024, is due to an increase in the weighted average principal outstanding for debt investments which earn PIK interest. Payments on PIK loans are normally received only in the event of payoffs. The PIK receivable for December 31, 2025 and December 31, 2024 was approximately 3% and 2% of total debt investments, respectively.
Fee Income
Fee income is comprised of recurring fee income from commitment, facility, and loan related fees, fee income due to expired commitments, and acceleration of fee income due to early loan repayments during the period. The following table summarizes the components of fee income for the years ended December 31, 2025 and December 31, 2024:
(in thousands)
Year Ended December 31,
Recurring fee income
Fee income - expired commitments
Accelerated fee income - early repayments
Total fee income
The decrease in fee income for the year ended December 31, 2025, as compared to the year ended December 31, 2024, is primarily due to lower prepayment penalty from early repayments and lower fees recognized on expired commitments, partially offset by higher recurring fee income from an increase in the weighted average principal outstanding.
Operating Expenses
Our operating expenses are comprised of interest and fees on our debt borrowings, general and administrative expenses, taxes, and employee compensation and benefits. During the years ended December 31, 2025 and 2024, our net operating expenses totaled approximately $190.8 million and $167.8 million, respectively.
Interest and Fees on our Debt
Interest and fees on our debt totaled approx imately $103.2 million and $86.0 million for the years ended December 31, 2025 and 2024, respectively. Interest and fee expense during the year ended December 31, 2025, as compared to the year ended December 31, 2024, increased due to higher weighted average debt outstanding.
Our weighted average cost of debt was approximately 5.0% for each of the years ended December 31, 2025 and 2024. The weighted average cost of debt includes interest and fees on our debt, but excludes the impact of fee accelerations due to the extinguishment of debt, as applicable.
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General and Administrative Expenses and Tax Expenses
General and administrative expenses include legal fees, consulting fees, accounting fees, printer fees, insurance premiums, rent, expenses associated with the workout of underperforming investments and various other expenses. Our general and administrative expenses decreased to $19.0 million from $19.7 million for the years ended December 31, 2025 and 2024, respectively. The decrease in general and administrative expenses for the year ended December 31, 2025 is primarily attributable to a decrease in costs of office and professional fees and expenses. Tax expenses were $5.8 million for each of the years ended December 31, 2025 and 2024. Our t ax expenses primarily relate to excise tax accruals.
Employee Compensation
Employee compensation and benefi ts totaled approximately $63.3 million for the year ended December 31, 2025, as compared to approximately $54.2 million fo r the year ended December 31, 2024. The increase for the year ended December 31, 2025 was primarily due to fluctuations in variable compensation and increase in headcount.
Employee stock-based compensation totaled approximately $14.6 million for the year ended December 31, 2025, as compared to approximately $12.8 million for the year ended December 31, 2024. The increase for the year ended December 31, 2025 was primarily attributable to an increase in the grant date fair value of the Service Vesting Awards (as defined in “Note 8 — Equity Incentive Plans — Service Vesting Awards” to our consolidated financial statements).
Expenses allocated to the Adviser Subsidiary
The shared services agreement with the Adviser Subsidiary (the “Sharing Agreement”), provides the Adviser Subsidiary access to our human capital resources, including deal professionals, finance, and administrative functions, as well as other resources including infrastructure assets such as office space and technology. Under the terms of the Sharing Agreement, we allocate the related expenses of shared services to the Adviser Subsidiary. Our total net operating expenses for the years ended December 31, 2025 and 2024, are net of expenses alloc ated to the Adviser Subsidiary of $15.2 million and $10.8 million, respectively. The increase in expenses allocated to the Adviser Subsidiary for the year ended December 31, 2025 compared to 2024 is due to an increase in time spent on the Adviser Funds and an increase in investments allocated to the Adviser Funds. As of December 31, 2025 and 2024, there was $1.7 million and less than $0.1 million due from the Adviser Subsidiary, respectively.
Net Realized Gains and Losses and Net Change in Unrealized Appreciation and Depreciation
Realized gains or losses on investments are measured by the difference between the net proceeds from the repayment or sale and the cost basis of an investment without regard to unrealized appreciation or depreciation previously recognized, and includes investments written off during the period, net of recoveries. Realized loss on debt extinguishment relates to additional fees, costs, and accelerated recognition of remaining debt issuance costs, which are recognized in the event our debt is extinguished before its stated maturity. The net change in unrealized appreciation or depreciation on investments primarily reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.
A summary of net realized gains and losses for the years ended December 31, 2025 and 2024 is as follows:
(in thousands)
Year Ended December 31,
Realized gains
Realized losses
Realized foreign exchange gains (losses)
Realized loss on debt extinguishment
Net realized gains (losses)
During the year ended December 31, 2025, we recognized a net realized loss of $40.8 million. The net realized gains (losses) were generated from gross realized gains of $32.1 million primarily from sale of our equity positions in Axsome Therapeutics, Inc., BridgeBio Pharma, Inc and Madrigal Pharmaceuticals, Inc. and collections from our equity and warrants related to Akero Therapeutics, Inc., Couchbase, Inc. and Next Insurance, Inc. following capital market transactions or events. Our gains were offset by gross realized losses of $70.6 million from the write-off of our debt investments relating to restructure of Khoros, LLC and Annex Cloud and sale of AmplifyBio, LLC and Carbon Health Technologies, Inc., and the write-off of our equity and warrant investments in HilleVax, Inc., Chrome Holding Co. (p.k.a 23andMe, Inc.), bluebird bio, Inc., and others. Additionally, we recognized a foreign exchange loss of $2.1 million related to investments in foreign denominated debt investments and a forward contract.
During the year ended December 31, 2024, we recognized a net realized loss of $31.7 million. The net realized losses were generated from a realized loss of $63.1 million from the write-off of our debt investments relating to Convoy, Inc.,
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Gritstone Bio, Inc., Better Therapeutics, Inc., and Eigen Technologies Ltd., which are net of recovered collections of $55.5 million. $44.6 million of the write-off of our debt investments resulted in a reversal of unrealized depreciation previously reported as of December 31, 2023. We also realized a loss of $7.1 million primarily from the write-off of equity and warrant investments in Sio Gene Therapies, Inc., Eigen Technologies Ltd., Humanigen, Inc., Proterra, Inc., and Fulcrum Bioenergy, Inc. The net realized losses were partially offset by gross realized gains of $39.7 million primarily from the sale of our equity and warrant positions in Palantir Technologies, TransMedics Group, Inc., Tarsus Pharmaceuticals, Inc., DoorDash, Inc., and TG Therapeutics, Inc.
The net change in unrealized appreciation and depreciation of our investments is derived from the changes in fair value of each investment determined in good faith by our Valuation Committee and approved by the Board. The following table summarizes the change in net unrealized appreciation or depreciation of investments for the years ended December 31, 2025 and 2024:
(in thousands)
Year Ended December 31,
Gross unrealized appreciation on portfolio investments
Gross unrealized depreciation on portfolio investments
Reversal of prior period net changes in unrealized appreciation (depreciation) upon a realization event (1)
Net change in unrealized appreciation (depreciation) on portfolio investments
Other net changes in unrealized appreciation (depreciation) (2)
Total net change in unrealized appreciation (depreciation) on investments
(1) For the years ended December 31, 2025 and 2024, reversals of prior period net changes in unrealized appreciation (depreciation) include $45.2 million and $44.6 million, respectively, of reversed unrealized depreciation, related to the $57.7 million and $63.1 million, respectively, of realized debt losses from the write-off of certain debt investments noted above.
(2) Includes the net change in unrealized appreciation (depreciation) related to foreign exchange movements, derivative instruments and other assets and liabilities.
During the years ended December 31, 2025 and 2024, we recorded approximately $38.8 million of net unrealized appreciation and $31.2 million of net unrealized depreciation on our investments, respectively. The increase in unrealized appreciation was primarily related to appreciation on debt and warrant investments which was partially offset by depreciation of our equity investments during the year ended December 31, 2025.
The following table summarizes the key drivers of change in net unrealized appreciation (depreciation) of investments for the years ended December 31, 2025 and 2024:
(in thousands)
Year Ended December 31,
Debt
Equity, Warrants
and
Investment Funds (2)
Total
Debt
Equity, Warrants
and
Investment Funds (2)
Total
Investment valuation appreciation (depreciation)
Reversal of prior period net changes in unrealized appreciation (depreciation) upon a realization event (1)
Other net changes in unrealized appreciation (depreciation) (2)
Net change in unrealized appreciation (depreciation)
(1) For the years ended December 31, 2025 and 2024, reversals of prior period net changes in unrealized appreciation (depreciation) include $45.2 million and $44.6 million, respectively, of reversed unrealized depreciation, related to the $57.7 million and $63.1 million, respectively, of realized debt losses from the write-off of certain debt investments noted above.
(2) Includes the net change in unrealized appreciation (depreciation) related to foreign exchange movements, derivative instruments and other assets and liabilities.
Income and Excise Taxes
We account for income taxes in accordance with the provisions of ASC Topic 740, Income Taxes, under which income taxes are provided for amounts currently payable and for amounts deferred based upon the estimated future tax effects of differences between the financial statements and tax basis of assets and liabilities given the provisions of the enacted tax law. Valuation allowances may be used to reduce deferred tax assets to the amount likely to be realized. We intend to timely distribute to our stockholders substantially all of our annual taxable income for each year, except that we may retain certain net capital gains for reinvestment and, depending upon the level of taxable income earned in a year, we
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may choose to carry forward taxable income for distribution in the following year and pay any applicable U.S. federal excise tax.
Because federal income tax regulations differ from U.S. GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their appropriate tax character. Permanent differences may also result from the classification of certain items, such as the treatment of short-term gains as ordinary income for tax purposes. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.
The Adviser Subsidiary
The Adviser Subsidiary has entered into investment management agreements (the “IMAs”) with the Adviser Funds. Pursuant to the IMAs, the Adviser Subsidiary provides investment advisory and management services to the Adviser Funds in exchange for an asset-based fee. In addition, Hercules Capital Management LLC through its control of the general partner interests of each of the Adviser Funds may receive incentive fees based on the performance of the Adviser Funds. The Adviser Funds are privately offered investment funds exempt from registration under the 1940 Act that invest in debt and equity investments in venture or institutionally backed technology related and life sciences companies.
(in thousands)
As of December 31,
Assets Under Management *
Growth %
by the Company
by the Adviser Funds
Total
* Assets under management includes investments, at fair value, cash and cash equivalents, foreign cash and restricted cash.
The Adviser Subsidiary’s contribution to our net investment income is primarily derived from dividend income declared by the Adviser Subsidiary, expenses allocated to the Adviser Subsidiary, and interest income earned on loans to the Adviser Subsidiary. A summary of the Adviser Subsidiary’s contribution to our net investment income for the years ended December 31, 2025 and 2024 is as follows:
(in millions)
Year Ended December 31,
Dividend income
Expenses allocated
Interest income
For the years ended December 31, 2024 and December 31, 2023
A comparison of the fiscal years ended December 31, 2024 and December 31, 2023 can be found in our F orm 10- K for the fiscal year ended December 31, 2024 within “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”, which is incorporated herein by reference.
Financial Condition, Liquidity, Capital Resources and Obligations
Our liquidity and capital resources are derived from our debt borrowings and cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our debt and the proceeds from the turnover of our portfolio and from public and private offerings of securities to finance our investment objectives. We may also raise additional equity or debt capital through registered offerings off a shelf registration, At-the-Market (“ATM”) offerings, and private offerings of securities, by securitizing a portion of our investments, or by borrowing from the SBA through our SBIC subsidiaries. This “Financial Condition, Liquidity, Capital Resources and Obligations” section should be read in conjunction with the “Macroeconomic Market Developments” section above.
During the year ended December 31, 2025, we principally funded our operations from (i) cash receipts from interest, dividend, and fee income from our investment portfolio, (ii) cash proceeds from the realization of portfolio investments through the repayments of debt investments and the sale of debt and equity investments, (iii) debt borrowings on our Credit Facilities, 2028 Convertible Notes and June 2030 Notes, and (iv) equity offerings.
During the year ended December 31, 2025, our operating activities used $425.8 million of cash and cash equivalents, compared to $118.1 million used during the year ended December 31, 2024. The $307.7 million increase in cash used in operating activities was primarily due to a $ 271.9 million increase in net purchases of investments .
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During the year ended December 31, 2025, our investing activities used approximately $89 thousand of cash, compared to $705 thousand used during the year ended December 31, 2024. The $616 thousand decrease in cash used in investing activities was due to a decrease in purchases of capital equipment.
During the year ended December 31, 2025, our financing activities provided $368.9 million of cash, compared to $119.2 million provided during the year ended December 31, 2024. The $249.7 million increase in cash flows from financing activities during the year ended December 31, 2025 was primarily due to an increase in net borrowing activity of $289.2 million, partially offset by a decrease of $13.9 million in equity issued. W e distributed dividends of $326.0 million compared to $303.5 million, during the years ended December 31, 2025 and 2024, respectively . During the year ended December 31, 2025, our ATM program provided (net of offering costs) approximate ly $204.4 million compared to $218.3 million net proceeds received during the year ended December 31, 2024. During the year ended December 31, 2025, we issued $287.5 million in aggregate principal amount of 2028 Convertible Notes and $350.0 million in aggregate principal amount of June 2030 Notes. Additionally, during the year ended December 31, 2025, we fully repaid the aggregate outstanding $50.0 million, $70.0 million, and $50.0 million principal of the February 2025 Notes, June 2025 Notes, and June 2025 3-Year Notes, respectively.
As of December 31, 2025, our net assets to taled $2.2 billion, with a NAV per share of $12.13. We intend to continue to operate in order to generate cash flows from operations, including income earned from investments in our portfolio companies. Our primary use of funds will be investments in portfolio companies and cash distributions to holders of our common stock.
Available liquidity and capital resources as of December 31, 2025
As of December 31, 2025, w e had $525.5 million in available liquidity, including $57.0 m illion in cash, cash equivalents and foreign cash, and available borrowing capacity of approximately $21.5 million (net of $0.5 million of outstanding letter of credits) under the SMBC Facility, $175.0 million under our SMBC letter of credit facility, and $272.0 million under the MUFG Bank Facility, subject to certain conditions. Additional liquidity is available through accordion provisions within the terms of our Credit Facilities, through which the available borrowing capacity can be increased by an aggregate $360.0 million, subject to certain conditions. Further, the SMBC letter of credit facility may also be increased by an additional $225.0 million (up to $400.0 million), subject to certain conditions. Total amounts outstanding as of December 31, 2025, were $445.9 million outstanding under our Credit Facilities, which are floating interest rate obligations, and the remaining $1,867.2 million of term debt outstanding, which are all fixed interest rate debt obligations.
Not considered above, as of December 31, 2025, we held $2.5 million of cash classified as restricted cash. Our restricted cash relates to amounts that are held as collateral securing certain of our financing transactions, including collections of interest and principal payments on assets that are securitized related to the 2031 Asset-Backed Notes. Based on current characteristics of the securitized debt investment portfolios, the restricted funds may be used to pay monthly interest and principal on the securitized debt with any excess distributed to us or available for our general operations. Refer to “Note 5 – Debt” included in the notes to our consolidated financial statements appearing elsewhere in this report for additional discussion of our debt obligations.
The 1940 Act permits BDCs to incur borrowings, issue debt securities, or issue preferred stock unless immediately after the borrowings or issuance the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock is less than 200% (or 150% if certain requirements are met). On September 4, 2018 and December 6, 2018, our Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) and our stockholders, respectively, approved the application to us of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. As of December 31, 2025, our asset coverage ratio under our regulatory requirements as a BDC was 212.1% excluding our SBA debentures. We received an exemptive order from the SEC that allows us to exclude all SBA leverage as senior securities from our asset coverage ratio. As a result of the SEC exemptive order, our ratio of total assets on a consolidated basis to outstanding indebtedness may be less than 150%, which while providing increased investment flexibility, also may increase our exposure to risks associated with leverage. Total asset coverage when including our SBA debentures as senior securities was 195.5% as of December 31, 2025.
The 1940 Act prohibits us from selling shares of our common stock at a price below the current NAV per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below NAV provided that our Board makes certain determinations. We do not currently have the authorization from our stockholders to issue common stock at a price below the then-current NAV per share and there is no guarantee that we will obtain such authorization from our stockholders in the future.
As detailed above, our diverse and well-structured balance sheet is designed to provide a long-term focused and sustainable investment platform. Currently, we believe we have ample liquidity to support our near-term capital requirements. As the impact of the macro-economic events, potential global recession, acts of terrorism, war, geopolitical
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events, and the related disruption to markets and business continues to impact the economy, we will continue to evaluate our overall liquidity position and take proactive steps to maintain the appropriate liquidity position based upon the current circumstances.
Equity Offerings
We may from time-to-time issue and sell shares of our common stock through public or ATM offerings. We currently sell shares through our equity distribution agreements (the “2024 Equity Distribution Agreements”) with Citizens JMP Securities LLC and Jefferies LLC (the “Sales Agents”) entered into on December 12, 2024. The 2024 Equity Distribution Agreements provide that we may offer and sell up to 30.0 million shares of our common stock from time to time through the Sales Agents. Sales of our common stock, if any, may be made in negotiated transactions or transactions that are deemed to be “at the market,” as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE or similar securities exchange or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices. The 2024 Equity Distribution Agreements replaced the ATM equity distribution agreements between us, and the Sales Agents executed on May 5, 2023. We generally use net proceeds from these offerings to make investments, to repurchase or pay down liabilities and for general corporate purposes. As of December 31, 2025, approximately 18.8 million shares remain available for issuance and sale under the 2024 Equity Distribution Agreements.
During the year ended December 31, 2025 , we issued and sold 11.2 million shares of our common stock pursuant to the 2024 Equity Distribution Agreements receiving total accumulated net proceeds of approximately $204.4 million. This is a decrease from the year ended December 31, 2024, where we issued and sold 11.7 million shares of our common stock receiving total accumulated net proceeds of approximately $218.3 million.
Stock Repurchase
We may from time to time seek to retire or repurchase our common stock through cash purchases, as well as retire, cancel or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. The amounts involved may be material. We had no common stock repurchases during the years ended December 31, 2025, 2024, or 2023.
Commitments and Obligations
Our significant cash requirements generally relate to our debt obligations. As of December 31, 2025, we had $2,313.1 million of debt outstanding, $425.0 million due within the next year, $637.5 million due within 1 to 3 years, and $1,250.6 million due beyond 3 years.
In addition to our debt obligations, in the normal course of business, we are party to financial instruments with off-balance sheet risk. These consist primarily of unfunded contractual commitments to extend credit, in the form of loans, to our portfolio companies. Unfunded contractual commitments to provide funds to portfolio companies are not reflected on our balance sheet.
Our unfunded contractual commitments may be significant from time to time. A portion of these unfunded contractual commitments are dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available. Furthermore, our credit agreements contain customary lending provisions which allow us relief from funding obligations for previously made unfunded commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the company. These commitments will be subject to the same underwriting and ongoing portfolio maintenance as are the on-balance sheet financial instruments that we hold. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. As such, our disclosure of unfunded contractual commitments includes only those which are available at the request of the portfolio company and unencumbered by milestones. Refer to “Note 11 – Commitments and Contingencies” included in the notes to our consolidated financial statements appearing elsewhere in this report for additional discussion of our unfunded commitments.
As of December 31, 2025, we had approximately $385.6 million of available unfunded commitments, including undrawn revolving facilities, which were available at the request of the portfolio company and unencumbered by future or unachieved milestones, as well as uncalled capital commitments to make investments in private equity funds. In order to draw a portion of the our available unfunded commitments, a portfolio company must submit to us a formal funding request that complies with the applicable advance notice and other operational requirements. The available unfunded commitments excludes unfunded commitments (i) for which, with respect to a portfolio company's agreement, a milestone was achieved after the last day on which the portfolio company could have requested a drawdown funding to be completed
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within the reporting period; and (ii) $96.2 million of unfunded commitments which represent the portion of portfolio company commitments assigned to or directly committed by the Adviser Funds.
Additionally, we had approximately $814.6 million of non-binding term sheets outstanding to eight new companies and three existing companies, which generally convert to contractual commitments within approximately 90 days of signing. Non-binding outstanding term sheets are subject to completion of our due diligence and final investment committee approval process, as well as the negotiation of definitive documentation with the prospective portfolio companies. Not all non-binding term sheets are expected to close and do not necessarily represent future cash requirements.
The fair value of our unfunded commitments is considered to be immaterial as the yield determined at the time of underwriting is expected to be materially consistent with the yield upon funding, given that interest rates are generally pegged to market indices and given the existence of milestones, conditions and/or obligations embedded in the borrowing agreements.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the period reported. On an ongoing basis, our management evaluates its estimates and assumptions, which are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Changes in our estimates and assumptions could materially impact our results of operations and financial condition.
For a description of our critical accounting policies, refer to “Note 2 – Summary of Significant Accounting Policies” included in the notes to our consolidated financial statements appearing elsewhere in this Annual Report. We consider the most significant accounting policies to be those related to our Valuation of Investments, Fair Valuation Measurements, Income Recognition, and Income Taxes. The Valuation of Investments is our most significant critical estimate. The most significant input to this estimate is the yield interest rate, which includes the hypothetical market yield plus premium or discount adjustment, used in determining the fair value of our debt investments. The following table shows the approximate increase (decrease) to the fair value of our debt investments from hypothetical change to the yield interest rates used for each valuation, assuming no other changes:
(in thousands)
Change in unrealized
appreciation (depreciation)
Basis Point Change
For a further discussion and disclosure of key inputs and considerations related to this estimate, refer to “Note 3 - Fair Value of Financial Instruments” included in the notes to our consolidated financial statements appearing elsewhere in this report.
