Horizon Technology Finance Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 1, 2023

There are 8 speakers on the call.

Operator

Greetings and welcome to Horizon Technology Finance Corporation Third Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Megan Bacon, Director, Investor Relations and Thank you, Ms.

Operator

Beacon. You may begin.

Speaker 1

Thank you, and welcome to Horizon Technology Finance Corporation's 3rd quarter 2023 conference call. Representing the company today are Rob Pomeroy, Chairman and Chief Executive Officer Jerry Michaud, President and Dan Trolio, Chief Financial Officer. I would like to point out that the Q3 earnings press release and Form 10 Q are available on the company's website at horizontechfinance.com. Before we begin our Formal remarks, I remind everyone that during this conference call, the company will make certain forward looking statements, including statements with regard to the future performance of the company. Words such as believes, expects, anticipates, intends or similar expressions are used to identify forward looking statements.

Speaker 1

These forward looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors The company undertakes no obligation to update or revise any forward looking statements whether as a result of new information, future events or otherwise. At this time, I would like to turn the call over to Rob Pomeroy.

Speaker 2

Welcome everyone and thank you for your interest in Horizon. As we always do on our quarterly calls, I will update you on our performance and our current overall operating environment. Jerry will then discuss our business development efforts, our portfolio events and our markets, And Dan will detail our operating performance and financial condition. We will then take some questions. We We had a strong quarter from the standpoint of net investment income with NII significantly exceeding our quarterly distributions.

Speaker 2

However, our net asset value as of the end of the quarter was negatively impacted by adverse events in our portfolio, which resulted in markdowns in the Our advisor Horizon Technology Finance Management and its experienced and expert team We remain focused on our portfolio's credit quality as we navigate through the stressed macro environment and maximize the value of our portfolio over the longer term. Turning to our specific results for the quarter. We generated net investment income of $0.53 per share, Well in excess of our declared distribution level, due largely to higher interest rates on our floating rate debt investment portfolio, as well as lower incentive fees earned by our advisor. Dan will further discuss the impact of incentive fees on NII in his remarks. Based on our outlook and our undistributed spillover income of $1.23 per share as of September 30, Our Board declared regular monthly distributions of $0.11 per share through March of 2024 as well as an additional special distribution of $0.05 per share for the 4th consecutive year payable in December.

Speaker 2

We achieved a portfolio yield of over 17% on our debt investments for the quarter, once again at or near the top of the BDC industry. We raised $14,000,000 of equity from our at the market program at a premium to NAV, further enhancing our investment capacity. Our portfolio at quarter end stood at $729,000,000 growing modestly from June 30. We finished the quarter with a committed and approved backlog of $202,000,000 providing us with a solid base of opportunities to thoughtfully grow our portfolio. As a reminder, most of our funding commitments are subject to our portfolio companies meeting certain key milestones.

Speaker 2

Finally, we ended the quarter with a net asset value of $10.41 per share. The largest impact on our NAV was a result of our fair value markdown of our debt investment in Evelo Biosciences, which Jerry will provide more detail about. We continue to work closely with and support not only Evelo, But all of our portfolio companies as we focus on improving our overall credit profile and maximizing recovery. We continue to seek high quality new investments to grow our portfolio despite the challenging macro environment. As we close out 2023, we are hopeful that the volatility in the macro environment will ease and the negative credit cycle will Our team remains focused on credit quality and executing on our investment strategy in order to create additional value for our shareholders over the long term.

Speaker 2

With that, I will now turn the call over to Jerry and Dan to give you more details and color on our performance. Jerry?

Speaker 3

Thanks, Rob, and good morning, everyone. Our portfolio grew slightly from the prior quarter to $729,000,000 as of September 30 as a result of our careful approach to new originations In the face of ongoing macroeconomic and VC headwinds, our portfolio size was impacted partially due to our portfolio markdowns. In the Q3, we funded 8 debt investments totaling $88,000,000 including debt investments to 4 new portfolio companies and 4 existing portfolio companies. While we maintain a healthy pipeline, We expect to remain selective in originating debt investments during the remainder of 2023. Our onboarding yield of 13.9% during the quarter remained near our historic highs continuing to reflect Higher interest rate environment in our markets as well as our pipe, our discipline in structuring and pricing transactions, which we expect to produce strong net investment income.

Speaker 3

During the quarter, we experienced 1 loan prepayment, 2 refinance loans and 1 partial pay down totaling $38,000,000 in prepaid principal. We expect prepayments remain muted in the Q4 of 2023 compared to our historic levels given the weak IPO and M and A markets. Our debt portfolio yield of 17.1% continues to validate structuring our investments with floating interest rates a rising interest rate environment, we again generated 1 of the highest debt portfolio yields in the BDC industry. As of September 30, We held warrant and equity positions in 99 portfolio companies with a fair value of $42,000,000 As a reminder, Structuring investments with warrants and equity rights is a key component of our venture debt strategy and a potential generator of shareholder value. In the Q3, we closed $178,000,000 in new loan commitments and approvals and ended the quarter with a committed and approved backlog of 2 0 $2,000,000 compared to $159,000,000 at the end of the second quarter.

Speaker 3

We believe our committed backlog with most of our funding commitments subject to our portfolio companies achieving certain key milestones, provides a solid base as we seek to prudently grow our portfolio. We also continue to work closely with all of our current portfolio companies to navigate the choppy macro environment. Unfortunately, our portfolio company, Evelo Biosciences, had 2 unfavorable trial outcomes during 2023, including a failed Phase 2a trial for psoriasis drug 2,923 in October. As a result, in the Q3, we recorded a significant unrealized loss on our evelo debt investment. We Our debt investment in the prior quarter and continued to diligently work toward achieving additional recoveries on our investment.

Speaker 3

Subsequent to the end of Q3, Horizon received an additional cash pay down of $11,000,000 from Avelo, With the $5,000,000 pay down Horizon received from Adelo early in the Q3, Horizon has received a total of $16,000,000 in principal repayments on its XINVELO debt investments in 2023. In addition, we are working closely and collaboratively with the company as it seeks strategic alternatives to maximize the value of its core technology platform. Overall, We are closely monitoring all of our portfolio companies and are working with their management teams, investors and other stakeholders to assist them in the challenging macro and venture capital environment. As of September 30, 87% of our debt portfolio Our 5 2 rated debt investments at September 30 are slightly higher than the 4 2 rated debt investments in Q2. We also have 2 1 rated debt investments at the end of Q3, which represent 2.3% of our total debt portfolio.

Speaker 3

Turning now to the venture capital environment. According to PitchBook, approximately $37,000,000,000 was invested in VC backed companies in the Q3 of 23 compared to $46,000,000,000 in Q3 of 2022 $87,000,000,000 in the Q3 of 2021. VC activity levels remain under considerable stress as VC investments in new portfolio companies made in 2021 and The first half of twenty twenty two are significantly overvalued in the current economic market. As a result, The ability of VC backed companies to raise new capital is challenging. Combined with a virtually closed IPO market and a muted M and A market, VC backed technology and life science companies are finding it increasingly difficult to raise much needed capital to fund operations and grow.

Speaker 3

On a positive note, judging from our healthy pipeline, we believe there is significant number of opportunities to invest in quality companies seeking capital, particularly debt capital to fill their ongoing needs. We believe venture lenders, especially public BDCs remain best positioned to fill this need, but the opportunity is tempered by the existing overall market conditions. In terms of VC fundraising, Only $9,000,000,000 was raised in the 3rd quarter and the market is now on pace to record a 9 year low, while the avenue to public exits is still largely closed. BC's committed capital from their LPs remains elevated to the amounts raised during the good times a reluctance to invest in the current market. While we expect this to continue in the near term, the amount of sideline capital does provide VCs with the ability to PC backed exit activity improved in the 3rd quarter as total exit value for the quarter was $36,000,000,000 driven primarily by the Instacart and Klaviyo IPOs.

Speaker 3

However, their stock prices have underperformed post IPO And their IPOs have not provided the momentum that the market saw for new IPO issuances. The M and A market for venture backed These also remained at historic lows during Q3. There is a potential positive indicator for M and A in the life science market With Big Pharma Companies sitting on historical high levels of cash and with blockbuster drugs coming off patent protection in the next 4 years, Big pharma needs to needs need for new drugs and potential blockbusters could lead to significant M and A activity with big pharma companies buying Smaller development companies with drugs in the clinical pipeline in order to restart their own drug pipelines. In terms of market conditions for new venture loan investment, we expect the challenging environment to continue into at least the early portion of 2024. Accordingly, Horizon will maintain a pragmatic and cautious approach to new investment opportunities, serving the value and quality of its current portfolio.

Speaker 3

When the global economic and investment environment stabilizes And the venture capital ecosystem improves, we believe Horizon's solid reputation and long term market presence will allow us to re Accelerate its portfolio growth through the new high quality venture debt loans. A key baseline for future prudent portfolio growth Our committed, approved and awarded backlog, which as of today stands at $227,000,000 and our advisors pipeline of new opportunities, which as of today stands at over $1,000,000,000 To sum up, we continue to sharply focus on credit quality and providing our portfolio companies with support and alternative solutions when necessary to ensure optimal outcomes for our portfolio. Where there are attractive high quality companies looking for venture debt solutions, we will look to thoughtfully add to our pipeline and backlog with an eye toward prudently growing our portfolio. Based on current portfolio size and yield, we believe we remain well positioned to generate solid NII for our shareholders and additional long term shareholder value. With that, I will now turn the call over to Dan.

Speaker 4

Thanks, Jerry, and good morning, everyone. During the Q3, the yield generated from our debt investments once again produced NII that more than covered our distribution. In addition, we continue to strengthen our balance sheet through our ATM program, Successfully and accretively raising an additional $14,000,000 of capital providing us with capacity to prudently make new investments. As of September 30, we had $80,000,000 in available liquidity consisting of $47,000,000 in cash $33,000,000 of funds available to be drawn under our existing credit facilities. Currently have $25,000,000 outstanding Under $150,000,000 KeyBanc credit facility and $181,000,000 outstanding on our $250,000,000 New York Life credit facility leaving us with ample capacity to grow the portfolio.

Speaker 4

Our debt to equity ratio stood at 1.27:one as of September 30 And netting out cash on our balance sheet, our leverage was 1.12:one which was below our target leverage of 1.2:one. Based on our cash position and our borrowing capacity on our credit facilities, our potential new investment capacity at September 30 was $241,000,000 For the Q3, we earned total investment income of $29,000,000 an increase of 25% compared to the prior year period. Interest income on investments increased primarily as a result of the higher average Our net investment portfolio on a net cost basis stood at $717,000,000 as of September 30, a 2% increase from June 30, 2023. For the Q3 of 2023, we achieved onboarding yields of 13.9% compared to 13.6% achieved in the 2nd quarter. Our loan portfolio yield was 17.1% for the 3rd quarter compared to 0.9 percent for last year's Q3.

Speaker 4

Total expenses for the quarter were $11,600,000 compared to $12,000,000 in the Q3 of 2022. Our interest expense increased to $7,100,000 from $5,300,000 in last year's Q3 due to an increase in average borrowings and higher interest rates on our borrowings. Our base management fee was 3,200,000 up from $2,800,000 in last year's Q3 due to an increase in the average size of our portfolio. We had no performance based incentive fee in the 3rd quarter compared to an incentive fee of $2,800,000 for last year's Q3. This was due to the deferral of incentive fees otherwise earned by our advisor in the quarter under our incentive fee cap and deferral mechanism.

Speaker 4

The deferral was driven by unrealized and realized losses on our portfolio. Net investment income for the Q3 of $2,023.53 per share compared to $0.53 per share in the Q2 of $2,020.43 per share for the Q3 of 2022. The company's undistributed spillover income as of September 30 was $1.23 per share. We anticipate that the size of our portfolio, the increase in our portfolio's interest rates along with our predictive pricing strategy will enable us to continue generating NII that covers our distributions. As we have said previously, while we expect to experience repayments Through the end of the year, we still believe repayments will be below our historical levels given the current environment.

Speaker 4

To summarize our portfolio activities for the Q3, new originations totaled $88,000,000 which were offset by $9,000,000 in scheduled principal payments and $38,000,000 in principal prepayments, refinancings and partial pay downs. We ended the quarter with a total investment portfolio of $729,000,000 Given the macro environment, we expect to remain selective in the near term with respect to origination. At September 30, the portfolio consisted of debt investments in 56 companies with an aggregate fair value of 680,000,000 and a portfolio of warrant, equity and other investments in 102 companies with an aggregate fair value of 49,000,000 Based upon our portfolio outlook, our Board declared monthly distributions of $0.11 per share for January, February March 2024 and a special distribution of $0.05 per share payable in December of 2023. We remain committed Providing our shareholders with distributions that are covered by our net investment income over time. Our NAV as of September 30 was $10.41 per compared to $11.07 as of June 30, 2023 and $11.66 as of September 30, 2022.

Speaker 4

The $0.66 reduction in NAV on a quarterly basis was primarily due to our paid distributions, realized losses and adjustments to fair value partially offset by net investment income. As we've consistently noted 99% The outstanding principal amount of our debt investments, their interest rate at floating rates of coupons that are structured to increase as interest rates rise with interest rate floors. As of today, 95% of our debt portfolio will benefit from additional increases in the prime rate. This concludes our opening remarks. We'll be happy to take questions you may have at this time.

Operator

Thank you. We will now be conducting a question and answer One moment please while we poll for questions. The first question comes from the line of Bryce Roe with B. Riley Securities. Please go ahead.

Speaker 5

Thanks. Good morning.

Speaker 3

Good morning. Good morning.

Speaker 5

Let's see, wanted to start on just the level of spillover. Obviously, it's growing. You've paid a special dividend here for several consecutive years. Any way to kind of think about kind Sizing that spillover up and how you're thinking about managing it given the increase in spillover?

Speaker 4

Yes. Good morning, Bryce. Just we look at the distribution every quarter with our Board members and taking consideration The activity in the portfolio and the income that it's generating and obviously the spillover. At these levels, we'll continue to do that and look at it through the regulatory requirements of distributing that. Nothing certain today.

Speaker 5

Okay, Dan. That's helpful. Thanks. I guess you've got time to kind of figure that out, but I was just curious if there was an update there. Next question, just Wanted to ask about a couple of portfolio companies that I guess you've seen a change Some of the maturity date, won the next car, you've got a maturity date of actually it was yesterday, and That was moved up.

Speaker 5

Any update you can provide there, kind of given the size of that investment? And then also wanted to ask about Nexi Building, any update on that particular investment? Thanks.

Speaker 3

Yes. So, hi, this is Jerry. So as it relates to NEXCAR, that company does continue to Raise capital in the marketplace and they are they would be in an interesting position if There were better exit markets and that was their expectation along with a lot of other company, DC backed companies Where the exit market is just not there for them. So they continue to raise capital, continue to get inside support from investors and They're in a very dynamic market there in the car kind of subscription rental business and it is a growing platform, but until exit markets kind of open up, they're going to continue to be internally funded and We're going to continue to work with them to help them get to a better exit opportunity and that's kind of where we are.

Speaker 5

And then Jerry, if you could just touch on Nexi building as

Speaker 3

well. Yes. Nexi kind of similar situation, very interesting product, good demand for their product, Difficult market in the kind of construction area right now. They do have overseas Contracts that they are plugged into. And so again, I think in better There would be opportunities for this company to do something a lot more exciting.

Speaker 3

But right now, they're just continue to be internally funded. They actually did get And outside investment, I think, in the Q3 from institutional investors. So we continue to work closely with them. And Again, hopefully to get to a better market where they can be more opportunistic in how they're thinking about financing their business.

Speaker 5

Excellent. Thank you for the commentary. I'll hop back in queue for some others to take a chance. Thanks.

Operator

Thank you. Next question comes from the line of Christopher Nolan with Ladenburg Thalmann. Please go ahead. Hi.

Speaker 6

For Evolow, were there any incremental investments made in the 4th quarter?

Speaker 3

No, no.

Speaker 6

Okay. And on the call you said there was $16,000,000 of repayments In the Q3 Correct.

Speaker 3

Yes. So in the Q3, the company completed a pipe transaction. They raised $25,000,000 Mostly from inside investors, led by Flagship, who has about $140,000,000 or had about I think it's more than that now invested in the company. And when that transaction closed, we received a $5,000,000 pay down and we converted $5,000,000 Of our debt to equity, which at the time gave us about an 11% ownership position in the public company. And the expectation or the hope was certainly that the clinical trial for psoriasis would have turned out better.

Speaker 3

We were very disappointed. Obviously, the company was very disappointed in the results of that. But Once they announced the results of that trial, it didn't meet its endpoints. The company paid down an additional $11,000,000 which we actually just received last week. So we got $16,000,000 in paydown since the 3rd quarter And combined with what we received here in the early in Q4.

Speaker 3

Okay.

Speaker 6

And then, I saw on the queue that for Evolow, you also marked down your equity positions. Do these Pipe transactions, should we expect further write downs in equity from your perspective? Or do you think Insider stepping up will stabilize your equity investment.

Speaker 3

Yes. I think we actually have a note in our In our Q that we filed a subsequent event that we believe that we will be marking down the equity in the Q4 as well.

Speaker 6

Okay. And I guess a final question. Were there any new non accrual investments in the 4th quarter?

Speaker 4

So from the Q3, there were a couple of different names You can see them on the schedule investments, the names that are on non accrual and they were new names, one name And a couple names did get tagged as non accrual for the quarter, Avelo being one of them and Robin being another.

Speaker 6

Yes, I'm asking for the Q4 to date.

Speaker 4

4th quarter to date, no.

Speaker 6

Okay. That's it for me. Thank you.

Operator

Thank you. Next question comes from the line of Ryan Lynch with KBW. Please go ahead.

Speaker 7

Hey, good morning. Following up on Bryce's questions on NEXCAR and NEXC, I don't want to necessarily lump these investments together because they're 2 different situations, but I had kind of similar questions on both of those. Number 1, I think you I believe you said they're both continue to be funded internally funded. I guess what does that mean, because I would assume that both of these are still Negative cash flowing businesses. So I would just love to hear what exactly that means.

Speaker 7

And then also what drove the decline In fair values for these businesses, because it sounds like the way you describe them both, and again, I know they're different companies, but kind of the way you describe them both is that The fundamentals of the business seem to be doing fine or maybe as expected, but the exit opportunities have certainly deteriorated just given market So was the weakness in the potential of kind of overall exit markets the driver of the Decline valuation or was something else moving that lower this quarter?

Speaker 3

Yes. Honestly, it is a little bit Exit markets and opportunities to fund the growth that would otherwise might be available to them. So in other words, They are operating okay. They are again, the investors continue to support the companies to a degree, but Really, outside capital is needed in some form or shape, meaning a public offering, an M and A or a large venture capital or crossover fund, I think, in probably both of these cases. And so they're working that's where they're spending a lot of their time right now.

Speaker 3

It's on trying to find That right exit opportunity in a market where exit opportunities are really difficult. And so they're getting funded because Investors see that there is value in the company and the potential for a positive exit still certainly exists. But I think this isn't just these 2 companies, I think across the venture capital community, most companies Really, you are spending an inordinate amount of time figuring out fundraising strategies. I think we provided some data on venture capital fundraising in the Q3. Again, it was down fairly significantly.

Speaker 3

Part of the issue is that many of the companies that were funded in 2020, 2021, certainly the first half of twenty twenty The valuation of those companies is in this market is they're significantly overvalued. And so It's hard to bring in new investment or attract new investment in that kind of scenario. So where there may be operationally growth opportunities, it's Difficult to take advantage of those when capital is so constrained.

Speaker 7

Right.

Speaker 3

And so to get maybe to get to The last part of your question. So not knowing when those markets are

Operator

going to

Speaker 3

turn, we have to be as we're looking at our debt investment, we have To be very sober about what happens if those markets continue to be as tight as they are, meaning exit markets And VC flows. We have to be very sober about how we value these assets.

Speaker 7

Okay. So it's primarily related to the exit markets and just the ability for These companies in the specific industries that they're in to fund operations, but not necessarily anything going on specific with these businesses deterioration? Is that a kind of a simplified version of what we're talking about?

Speaker 3

Yes, very simple because the fact of the matter is when it is difficult to raise capital, it is difficult for companies to make operational decisions Based on the need for additional capital that may not be there. So that does impact your ability to make, Which in a good market would be pretty straightforward operational decisions. It makes it more difficult to do that. And that again, that's just not just about these two companies. That's across the board.

Speaker 7

Okay. And then the other question I had was on Avelo, obviously disappointing outcome with that thus far. I'm just curious as you kind of look back on that investment, I understand it's still kind of an ongoing But as a lot of the results have already taken place at this point, What lessons have you learned from that investment specifically that will inform your decisions going on how you invest and then kind of a second part on that. That was an investment that was a pre revenue position in the life sciences area that was reliant on these clinical trials, the approval as well as I know you guys had a big majority supporter in that investment. But what percentage would you say of your life sciences investments are pre revenues and reliant on clinical trials?

Speaker 3

I don't have those exact numbers in front of me, but To get to the kind of core of your question, whenever we underwrite a life science company that's a drug development company, Obviously, burn cash with ongoing clinical trials. What you look for is a broad based technology platform. You look for a pipeline that has not just one drug candidate addressing one indication, you look for multiple drug Candidates addressing multiple indications. Those were all there when

Speaker 4

we underwrote the deal.

Speaker 3

And you also look for a strong investor base, which The company had, and I'm not trying to justify anything one way or the other. But historically, That's how we have always underwritten life science drug companies. And generally what happens is As these drug candidates move through clinical trials, the companies are able to raise more money, especially the public ones in the public market And continue moving other drugs through the clinic. So even if one of them fails, there is still a broad pipeline, there is still Numerous potential value in the assets. And to simplify this, and I really am simplifying it, The acceleration of how quickly each one of these clinical trials came to fruition, I think that was probably one of the things that we would look at.

Speaker 3

It's not just You have a great pipeline, but where are those drugs in the clinical trials? Not that we didn't look at that, maybe that should have been a greater focus. And it certainly should have been a greater focus given what happened in the overall life science market over the last Four quarters where funding has literally dried up and that includes IPOs, it includes follow on equity for public companies, It includes VC Investment and a lack of big pharma buying up these companies, which is usually A primary way that they end up exiting the market. So yes, there are some things we're certainly going to look at here. We do have other life science companies in our portfolio.

Speaker 3

They're in drug development stages. None of them, as I sit here today, They all seem to be fairly well funded going forward other than IMV, which we've already focused on. So that is something we'll look at. Right now, we're I got to tell you where we are laser focused on helping the company try to create as much value as they can with their underlying Platform Technology going forward. And I think hopefully by the end of the Q4, we might have something more to report on that.

Speaker 3

But right now, it's very early in Process, they just announced 10 days ago that the they had their 2,930 9 drug for psoriasis failed and they were going to look for Strategic alternatives. So we're really early in that process.

Speaker 7

Got it. One last one that I had. I think both in your prepared comments and your press release, you sort of talked about remaining selective and originating new investments in the remainder of 2023. I would assume that there's still really good deal opportunities out there, but I would assume that the Kind of the comment on remaining selective is to reduce leverage levels at the BDC. Is that kind of What is that kind of the driver behind remaining selective is that you can kind of get leverage levels down to a lower level?

Speaker 7

And If that is the case, where would you like to see leverage levels ultimately end up at?

Speaker 3

Well, let me just Address it from the marketing side and then Dan may have some comments. From the marketing side really, We have to you have to be really aware of Where market conditions are right now, particularly relative to venture capital investment, the kinds of companies that they Venture capitalists are still investing and they're still leaning forward on where are those companies, where are those markets. So you got on the marketing side, you got that. And there are Really good opportunities there because there are an exit really good exit markets for those kinds of companies. So companies that are performing really well, continuing to get I tracked capital, that's fine.

Speaker 3

But we're anyone who comes into the market and says, we Expect to be public next year. That's probably not if that's their goal and that's their exit strategy, that's probably not something That in today's market, we would consider being interested in. And I'll let Dan speak to the leverage side of this, but

Speaker 4

Yes. As we mentioned, we are net of cash at 1.12. So that's below our target leverage. So we're comfortable where we are today. Being selective, I would agree with Jerry.

Speaker 4

It's more just on the market dynamics and the deals we're looking at. Okay.

Speaker 7

All right. That's all for me. I appreciate the time today.

Operator

Thank you. There are no further questions at this time. I would like to I'll turn the call back to Robert Pomeroy, Chairman and CEO for closing comments.

Speaker 2

Thank you all for joining us this morning. We appreciate your continued interest and support in Horizon. We look forward to speaking with you again soon. This will conclude our call.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Key Takeaways

  • High net investment income of $0.53 per share in Q3, driven by a 17.1% debt portfolio yield that comfortably covered distributions.
  • Raised $14 million of equity at a premium to NAV via the ATM program, strengthening the balance sheet and supporting future investments.
  • Net asset value per share fell to $10.41 as of September 30, primarily due to a significant markdown on the Evelo Biosciences debt investment after unsuccessful clinical trials.
  • Managed a $729 million portfolio with a $202 million committed backlog and over $1 billion in pipeline opportunities, though new originations remain selective given the tight VC and exit markets.
  • Increased non‐accrual exposure, notably on Evelo and Robin, with the advisor intensifying efforts to preserve credit quality and maximize recoveries amid macro and VC headwinds.
AI Generated. May Contain Errors.
Earnings Conference Call
Horizon Technology Finance Q3 2023
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