Runway Growth Finance Q1 2026 Earnings Report

Runway Growth Finance EPS Results

• Actual EPS: $0.29
• Consensus EPS: $0.31
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: N/A

Runway Growth Finance Revenue Results

• Actual Revenue: $29.45 million
• Expected Revenue: $29.47 million
• Beat/Miss: Missed by -$15.00 thousand
• YoY Revenue Growth: N/A

Runway Growth Finance Announcement Details

• Quarter: Q1 2026
• Date: 5/7/2026
• Time: After Market Closes
• Conference Call Date: Thursday, May 7, 2026
• Conference Call Time: 5:00PM ET

Runway Growth Finance (NASDAQ:RWAY), Inc. is a publicly traded business development company that provides customized debt and equity financing solutions to high‐growth, venture‐backed companies. The firm specializes in structuring senior secured loans, unitranche facilities, second‐lien financings, convertible notes and equity co‐investments designed to extend the cash runway for late‐stage companies. Runway’s flexible capital offerings are aimed at supporting technology, life sciences and other innovation‐driven sectors as they pursue growth initiatives and prepare for liquidity events.

Originally launched in 2017 under the name Saratoga Investment Corp., the company rebranded as Runway Growth Finance in 2020 following the acquisition of an established middle‐market credit manager. Runway’s management team combines private credit, venture and growth investing expertise, leveraging deep relationships within the venture ecosystem to source and underwrite financing opportunities. Their investment approach emphasizes rigorous due diligence, active portfolio monitoring and collaboration with existing shareholders to drive value for portfolio companies.

Headquartered in the United States, Runway Growth Finance primarily serves companies based in North America while selectively considering opportunities in Western Europe. The firm targets businesses approaching significant milestones such as initial public offerings or strategic mergers and acquisitions, offering financing structures that help founders and investors preserve equity ownership and maintain strategic flexibility. Runway’s sector‐focused teams deliver tailored financing solutions designed to bridge the gap between late‐stage venture capital and public market access.

Runway Growth Finance Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Closed the SWK acquisition (closed April 6), creating a pro forma portfolio of ~$1.1B, increasing healthcare to ~32% of the portfolio, reducing top‑10 concentration from 54% to 43%, and management expects the deal to be accretive to EPS (partially in Q2, fully in Q3).
• Positive Sentiment: Senior leadership moves — JD Tamas hired for healthcare, Avisha Khubani promoted to Chief Credit Officer, Tom Raterman shifting to Vice Chairman, and Carmela Thomson named CFO — intended to strengthen origination, credit discipline, and financial operations.
• Negative Sentiment: Q1 results showed total investment income of $29.5M and NII of $10.6M while NAV per share declined to $12.13 (down 9.6% q/q) and pro forma NAV after SWK was $11.93, reflecting about $7.7M of transaction costs and a decline in net assets to $438.2M.
• Negative Sentiment: Credit deterioration in two positions — Marley Spoon and Blueshift moved to non‑accrual, lifting the weighted average risk rating to 2.67 and expected to reduce Q2 earnings by roughly $0.06 per share, though management emphasizes overall credit metrics remain stable.
• Neutral Sentiment: Board declared a $0.33/qtr distribution and launched a $15M share repurchase program, while liquidity stands at $372.3M with $370M borrowing capacity, though pro forma leverage rose to ~1.2 and available liquidity fell to ~$231.8M after the SWK close.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Runway Growth Finance first quarter 2026 earnings conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Quinlan Abel, Assistant Vice President, Investor Relations. Please go ahead.

[Quinlan Abel, Assistant Vice President of Investor Relations at Runway Growth Finance]

Thank you, operator. Good evening, everyone, and welcome to the Runway Growth Finance conference call for the 1st quarter ended March 31st, 2026. Joining us on the call today from Runway Growth Finance are David Spreng, Chief Executive Officer and Chief Investment Officer of Runway Growth Capital LLC, our investment advisor, Tom Raterman, Chief Financial Officer and Chief Operating Officer, and Carmela Thomson, our Senior Vice President, Finance and Accounting. Runway Growth Finance's 1st quarter 2026 financial results were released just after today's market close and can be accessed from Runway Growth Finance's investor relations website at investors.runwaygrowth.com. We have arranged for a replay of the call to be available on the Runway Growth Finance webpage. During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements.

[Quinlan Abel, Assistant Vice President of Investor Relations at Runway Growth Finance]

These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including, without limitation, market conditions caused by uncertainties surrounding interest rates, changing economic conditions, and other factors we identify in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate. As a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained on this call are made as of the date hereof, and Runway Growth Finance assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of SEC-related filings, please visit our website.

[Quinlan Abel, Assistant Vice President of Investor Relations at Runway Growth Finance]

With that, I will turn the call over to David.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

Thank you, Quinlan, and thank you, everyone, for joining us this evening to discuss our first quarter 2026 results. Today, I will highlight notable developments from the quarter, provide an update on recent leadership appointments, and offer additional color on our approach to software investments. Tom will take a deeper dive into our financial performance and portfolio metrics. I want to start by saying I am truly excited about the closing of the SWK transaction last month. It is a milestone moment for our investors and our team. In tandem with the closing of the deal, we are pleased to welcome JD Tamas as a Managing Director of Healthcare and Life Sciences Investing, where he will leverage his extensive expertise to further strengthen our investment platform. This acquisition has already strengthened our position in healthcare and further diversified our portfolio.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

JD's appointment is both a logical progression and a great opportunity as we further optimize our portfolio in the coming quarters. I would also like to congratulate Avisha Khubani on her promotion to Chief Credit Officer of our investment advisor, Runway Growth Capital. Since joining Runway in 2018, she has held a range of roles across portfolio monitoring and management, analytics, and valuation, bringing a deep understanding of our portfolio and credit discipline to this position. In addition, we are announcing today that Tom Raterman, our CFO and COO, who joined me shortly after I started the firm, will become Vice Chairman of Runway Growth Capital, effective June 30, 2026. He will be stepping back from his day-to-day roles at the BDC, including as CFO and COO, to focus on strategic initiatives that include portfolio optimization, platform-level M&A, capital market transactions, and capital formation.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

Tom will continue to play an integral role for the BDC, serving on our investment committee and assisting with special situation assets. In tandem with this news, we are very pleased to share that Carmela Thomson, our SVP, Finance and Accounting, will become CFO at that time. Carmela joined our firm in June 2021 from KPMG and played an integral role in our IPO later that year. Since then, Carmela has contributed meaningfully to our financial reporting processes and capital raising efforts and has managed important aspects of portfolio accounting and operations. Carmela's experience and expertise give her a strong understanding of Runway's financial strategy, capital structure, and portfolio construction as we enter our next phase. Lastly, I am energized to be returning to the role of Chief Investment Officer of our advisor.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

Our efforts since joining the BC Partners Credit platform have put the right pieces on the chessboard, and now we're going to work with this refreshed team to maximize returns for our shareholders. To that end, I'd like to thank Greg Greifeld for his dedication over the years at Runway and wish him well in his future endeavors. We are confident in this experienced leadership team and the contributions JD, Avisha, and Carmela will make, strengthening our origination and investment capabilities and financial operations and supporting our ability to deliver superior risk-adjusted returns. Turning to our portfolio activity for the quarter, it is important to note that as we work to close the SWK transaction, we temporarily slowed our evaluation of new opportunities in the pipeline to focus on integrating the SWK portfolio and post-transaction balance sheet.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

With the transaction now behind us, we are positioned to be very selective in capitalizing on a robust pipeline moving forward. We are even more confident in our ability to source high-quality investments across our core sectors, technology, healthcare, and select consumer products and services. In the first quarter, Runway Growth Finance delivered total investment income of $29.5 million and net investment income of $10.6 million. During the quarter, we completed four investments in new and existing portfolio companies, representing $17.6 million in funded investments. We also completed an additional debt commitment of $46.3 million, which will be partially funded during the second quarter of 2026. These investments included the following.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

First, the completion of a new $7.5 million investment to HR Pharmaceuticals, a founder-owned medical products platform specializing in the development, manufacturing, and supply of branded consumable products serving the acute and home care markets. We funded $5.5 million at close, along with $2 million of preferred equity financing. Second, we completed an additional debt commitment of $46.3 million to 13 Scents, a digitally native fragrance brand, which we expect will be partially funded during the second quarter of 2026. Finally, we completed three follow-on investments with an aggregate amount of $10.1 million to three existing portfolio companies. Subsequent to the first quarter, we continue to evaluate compelling opportunities that meet our high standards, while strategically increasing our exposure to innovative healthcare and life science companies with durable long-term business models.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

We look forward to updating you on these opportunities in further detail as appropriate. Turning to the ongoing market dynamics facing the sector. As discussed during our fourth quarter 2025 earnings call, the recent debate around software and AI disruption has contributed to increased scrutiny of private credit and has been further compounded by headlines around elevated redemptions in evergreen funds. While media coverage has leaned into this narrative, it has failed to recognize the resilience of actual credit performance despite macro and rate headwinds over the last few years. Underlying fundamentals remain solid, with default rates at manageable levels and broader credit metrics showing stability rather than stress. In terms of the venture market specifically, PitchBook/NVCA finds that activity remains modest overall and robust at the top end of the market, with record levels of capital deployed.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

The data also points to resilience in early-stage investing and sustained interest in high-growth areas like AI. This suggests that while the market is selective, there are clear pockets of strength and opportunity underpinning venture activity. Overall, we believe we are well-positioned for strong long-term performance despite the current sentiment, supported by our rigorous investment approach and our seasoned leadership team, which brings decades of venture capital experience. Our confidence is supported by our expanded platform, which is supported by the expertise of BC Partners Credit and further enhanced by the acquisition of SWK Holdings. With the closing of the SWK acquisition, we have meaningfully reconstructed our portfolio with attractive diversification in key sectors like healthcare, with stronger future earnings power. Today, we have a more diversified, balanced, and enhanced portfolio, with the healthcare and life sciences sector comprising 32% of the portfolio at fair value.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

This transformation is an important context as we discuss the quarter's results. With respect to our software portfolio and approach to software investing, we maintain our constructive long-term thesis on software and technology, our diligent approach to portfolio construction, and emphasis on risk mitigation. Across multiple economic cycles and market dislocations, our focus on high-quality, late-stage companies with proven fundamentals has contributed to the resilience of our portfolio over time. We remain confident in our existing software positions and continue to evaluate compelling opportunities in the sector. Our software investments are high quality, late-stage businesses characterized by mission-critical functions, long diligence and implementation cycles, and strong competitive moats, which include deep domain expertise, high switching costs, and diversified customer bases. We believe these attributes position our portfolio companies to not only coexist with AI, but to leverage it to optimize operations and accelerate market penetration.

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

We apply the same exceptional level of diligence and rigor in underwriting our software investments that we do to our portfolio at large. We remain confident in our pipeline and optimistic about the year as we realize the benefits of integrating the SWK portfolio and drive stronger outcomes for both our borrowers and our shareholders. Now, Tom, over to you.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Thank you, David. In the first quarter, we generated total investment income of $29.5 million and net investment income of $10.6 million, a decrease compared to $30 million and $11.6 million in the fourth quarter of 2025. Our weighted average portfolio risk rating increased to 2.67 in the first quarter of 2026, compared to 2.45 in the fourth quarter of 2025. Our weighted average risk rating changed primarily as a result of moving two loans, Marley Spoon and Blueshift, to category 5 in non-accrual status. Our weighted average risk rating calculated without these two specific loans moved from 2.67 to 2.37. Our rating system is based on a scale of 1 to 5, where 1 represents the most favorable credit rating.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Our total investment portfolio had a fair value of $886.3 million, a decrease of 4.4% from $927.4 million in the fourth quarter of 2025. As of March 31st, 2026, Runway Growth Finance had net assets of $438.2 million, decreasing from $485 million in the fourth quarter of 2025. NAV per share was $12.13, a decrease of 9.6% compared to $13.42 as of December 31st, 2025. The NAV per share disclosed subsequent to quarter end in connection with the SWK closing of $11.93, primarily reflected estimated transaction costs of $7.7 million.

[Tom Raterman, CFO and COO at Runway Growth Finance]

In discussing our NAV for the quarter, it's important to contextualize our go-forward portfolio and the financial benefits of the SWK acquisition. On a pro forma basis, our portfolio is $1.1 billion, more than offsetting the impact of repayments in the Runway portfolio during 2025. It also drives diversification in terms of both industry exposure and the reduction of average loan size by 11%. Healthcare and life sciences will now account for 32% of our portfolio and 30% of our debt portfolio, compared to 13% and 12% respectively at the end of first quarter. We expect to see a positive contribution to the portfolio's return profile over the balance of the year. Beyond financial contributions, our strength and origination capabilities enhance our ability to source high-quality investments and selectively upsize existing commitments.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Moving back to the quarter, we delivered $0.29 per share of net investment income and a base dividend of $0.33 per share. At quarter end, we had spillover income of approximately $0.65 per share. Net investment income this quarter was impacted by the acceleration of one-time deferred debt costs, as well as a smaller average portfolio size due to elevated prepayments in the second half of 2025, the effects of which were further compounded by slower originations ahead of the deal close, as we described earlier. Looking ahead to next quarter, we expect contributions from the fully integrated SWK portfolio and a lag in associated management fees to benefit NII by approximately $0.03 per share. However, we expect this benefit will be more than offset by the impact of Marley Spoon and Blueshift being placed on non-accrual late in Q1.

[Tom Raterman, CFO and COO at Runway Growth Finance]

The full quarter earnings impact of these new non-accruals of $0.06 per share will be reflected in Q2. We are actively working with the management teams at Marley Spoon, Blueshift, and Mingle Health and seek to achieve optimal outcomes for the portfolio. These situations are dynamic and, in the case of Marley Spoon, very complex, and as we've seen in the past, can take time to fully resolve. We do not see any thematic drivers to these recent credit downgrades. There are situations we have been monitoring and decided this was the prudent course of action to take at this time. Although our team puts maximum effort into avoiding these situations, some level of defaults are unavoidable, and we're working diligently to resolve them. With respect to the dividend, we believe that it's currently set at an appropriate level.

[Tom Raterman, CFO and COO at Runway Growth Finance]

We are committed to delivering for our shareholders, and our board continues to evaluate future distributions with the goal of maintaining consistency while maximizing returns. Our debt portfolio generated a dollar-weighted average annualized yield of 14.2% for the first quarter of 2026. Consistent with 14.2% in the fourth quarter of 2025, and declining from 15.4% in the same period last year. Moving on to expenses. Total operating expenses were $18.8 million, an increase from $18.4 million in the fourth quarter of 2025. We recorded a net realized gain on investments of $1.3 million during the first quarter of 2026, compared to a realized loss on investments of $380,000 during the fourth quarter of 2025.

[Tom Raterman, CFO and COO at Runway Growth Finance]

During the first quarter, we experienced one full repayment and one partial repayment totaling $15 million, scheduled amortization of $1.9 million, and $2.5 million in equity proceeds. We remain focused on maximizing value over both the short and long term and continue to monitor the portfolio closely. Overall, we believe that downside risk is manageable and that our portfolio is well-positioned to deliver stable results. Our confidence in the portfolio is supported by several key metrics which support a more balanced and right-sized mix of investments. Prior to the closing of the SWK transaction, our top 10 investments accounted for 54% of the portfolio and now account for only 43%. When looking at the breakdown of verticals within the portfolio, they are now more balanced across technology, financials, healthcare, and select consumer products and services.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Over half of our portfolio companies are cash flow positive, underscoring the strong fundamentals our portfolio is built on. Within our software portfolio specifically, 62% of the companies are cash flow positive, 100% of our loans have financial covenants, and the weighted average fair value as a percent of cost, excluding non-accruals, was 97%. 94% of the loans in our software portfolio are sponsored. Each position in our portfolio undergoes a comprehensive evaluation process internally on a quarterly basis and periodically by a third party. For perspective, every material software investment in our portfolio was reviewed by a third-party valuation specialist in Q1. The portfolio was constructed intentionally with 98% first lien exposure and well-diversified exposure across end markets. These results underscore the strength of our software portfolio and the diligence we apply to loans in the space.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Please refer to our earnings presentation for additional detail on our software exposure. As of March 31st, 2026, our leverage ratio and asset coverage ratio were 0.98 and 2.02 respectively, compared to 0.90 and 2.11 respectively, at the end of the fourth quarter of 2025. Our total available liquidity was $372.3 million, including unrestricted cash and equivalents. We have borrowing capacity of $370 million under our KeyBank credit facility. On a pro forma basis, immediately following the SWK transaction close, our leverage ratio, asset coverage ratio, and total available liquidity were approximately 1.2, 1.84, and $231.8 million, respectively.

[Tom Raterman, CFO and COO at Runway Growth Finance]

As of March 31st, 2026, we had a total of $179.2 million in unfunded commitments, which was comprised of $156.3 million to provide debt financing to our portfolio companies and $22.8 million to provide equity financing through our JV with Cadma. Approximately $23.3 million of our unfunded debt commitments are eligible to be drawn based on achieved milestones. On May 5th, 2026, our board declared a regular distribution for the second quarter of 2026 of $0.33 per share. While there may be some variability in earnings on a quarter-to-quarter basis, we're confident in the long-term trajectory of our return profile and the strength of our combined portfolio. Finally, today, we are announcing a new share repurchase program for $15 million, which will expire on May 7th, 2027.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Thoughtful capital allocation remains a priority, and at current levels, we believe Runway's common shares present a highly attractive opportunity. We expect repurchases to be partly funded by proceeds from loan repayments in the coming quarters. With that, operator, we can open the line for Q&A.

[Operator]

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Again, that's star one one on your telephone to ask a question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Erik Zwick of Lucid Capital Markets. Your question please, Erik.

[Erik Zwick, Analyst at Lucid Capital Markets]

Thanks. Good afternoon, everyone. First, David, you mentioned a lot of kind of personnel changes and promotions, and I know Tom's on the line. Tom, congratulations on your next position and congrats to any of those else listening online. One, I wanted to start maybe with a question for Tom. Just trying to potentially understand the kind of one-time expenses that may have been recorded in the quarter related to both the SWK acquisition and also, I think, you mentioned some accelerated debt expense as well. Just trying to kind of drill down to maybe what a more kind of core run rate might have been.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Yeah. There was about $0.02 or $0.03 related to the early redemption of our baby bonds. If you recall, at the end of January, beginning of February, we did a new baby bond offering and we redeemed our 8% notes.

[Tom Raterman, CFO and COO at Runway Growth Finance]

That's the number there. There were no SWK expenses directly. Most all of those would be capitalized into the transaction. You know, there's a, you know, could be some modest amount just in terms of allocation of personnel that caused our allocations to the BDC change a little bit. It would be a rounding error.

[Erik Zwick, Analyst at Lucid Capital Markets]

Got it. That's helpful. Thanks.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Thanks for the congrats.

[Erik Zwick, Analyst at Lucid Capital Markets]

Yeah, absolutely. You're welcome. Other one I wanted to ask, just along the lines of the new share repurchase authorization. You know, given Blueshift and Marley Spoon moving to a non-accrual and creating a little bit of, you know, earnings headwind, just how do you weigh, you know, in your mind, how do you evaluate the use of capital in terms of investing into new portfolio companies that would generate income versus buying back shares?

[Tom Raterman, CFO and COO at Runway Growth Finance]

Yeah, it's always a tough balancing act between those two because purchasing shares at this level, at this percent of NAV is immediately accretive. What really guides that is our excess borrowing base, if you will, and our leverage ratio that we calculate. We wanna keep those two in check. We wanna make sure we maintain adequate dry powder. We'll just be biased towards, for the deals that come in, for those that have the best risk-return trade-off, choose the higher yielding ones, probably the smaller-sized transactions, all within our stated risk parameters.

[Erik Zwick, Analyst at Lucid Capital Markets]

Great. Thanks for taking my questions.

[Tom Raterman, CFO and COO at Runway Growth Finance]

Sure.

[Operator]

Thank you. Once again, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Our next question comes from the line of Christopher Nolan of Ladenburg Thalmann. Your line is open, Christopher.

[Christopher Nolan, Analyst at Ladenburg Thalmann]

Hi, and echo congratulations, Tom, on your next move, and congratulations everyone who got the step. What was the driver for the unrealized appreciation charges again? I think you misaddressed it in the comments, but I missed it.

[Tom Raterman, CFO and COO at Runway Growth Finance]

The changes in fair value, the impact on NAV were really related primarily to, put it into two buckets. About a third, or just under a third, was related to declines in the, in the market multiples. The majority of it was related to the watchlist names, primarily Blue Shift and Marley Spoon.

[Christopher Nolan, Analyst at Ladenburg Thalmann]

Great. I think you mentioned that the drag on earnings from those two would be roughly $0.06 a quarter?

[Tom Raterman, CFO and COO at Runway Growth Finance]

That's correct. You know, you know, our watchlist, you know, is about six names. A number of them are marked, you know, at that 50% range. We think those are very fair marks. Those workouts will take varying times to sort through. They've got different levels of complexity. So, it will take a little bit of time to replace those with earning assets. There's a game plan for each of them that's being, you know, fully adjudicated.

[Christopher Nolan, Analyst at Ladenburg Thalmann]

Okay. Turning to SWK, I know you mentioned earlier that in earlier calls that it would be accretive to earnings. Do you have any sort of timeframe when you expect it to be accretive to EPS?

[Tom Raterman, CFO and COO at Runway Growth Finance]

It should be beginning to be accretive to EPS in Q2 and then fully accretive in Q3. The reason I say partially accretive is because it closed on April 6th as opposed to March 31st.

[Christopher Nolan, Analyst at Ladenburg Thalmann]

Great. Thank you.

[Operator]

Thank you. I would now like to turn the call back over to David Spreng for closing remarks. Sir?

[David Spreng, CEO and Chief Investment Officer at Runway Growth Capital]

Thank you, operator, and thank you all for joining us today. We look forward to updating you on our second quarter financial results in August.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Quinlan Abel, Assistant Vice President of Investor Relations
• Tom Raterman, CFO and COO

Analysts

• Christopher Nolan, Analyst at Ladenburg Thalmann
• David Spreng, CEO and Chief Investment Officer at Runway Growth Capital
• Erik Zwick, Analyst at Lucid Capital Markets