CION Investment Q1 Earnings Call Highlights

Key Points

• Q1 earnings fell as net investment income dropped to $12.9 million, or $0.25 per share, from $18.3 million in the prior quarter, with management citing lower transaction activity, weaker dividend income and higher interest expense. CION said the shortfall versus its $0.30 per share monthly base distributions was largely temporary and not a reflection of the portfolio’s long-term earnings power.
• NAV declined 4.7% to $13.11 per share, mainly due to unrealized mark-to-market losses and the company under-earning distributions. Management said most of the mark declines were driven by market factors such as public comp valuations and wider credit spreads, not fundamental credit deterioration.
• Credit quality remained stable, with weighted average interest coverage at 2.08x and non-accruals improving to 1.53% of fair value. CION said its portfolio stayed heavily defensive, with about 81% in first-lien investments and roughly 98% risk-graded three or better.

CION Investment NYSE: CION reported lower first-quarter 2026 earnings as reduced transaction activity, lower dividend income and higher interest expense weighed on results, while management emphasized that it views the quarter’s weakness as largely separate from the underlying performance of its portfolio.

The business development company reported net investment income of $12.9 million, or $0.25 per share, compared with $18.3 million, or $0.35 per share, in the fourth quarter. Total investment income declined to $49.5 million from $53.8 million in the prior quarter.

Co-Chief Executive Officer Mark Gatto said the quarter was “not our strongest” from a headline perspective, but argued that the drivers were nuanced. He said the shortfall versus the company’s monthly base distributions of $0.30 per share for the quarter was driven mainly by lower transaction fees from reduced repayment and investment activity, lower dividend income and higher interest expense tied to recent refinancing activity.

“We believe that the underlying earnings capacity of our portfolio remains intact, and we remain optimistic about the trajectory from here,” Gatto said.

Net Asset Value Declines on Unrealized Marks

CION’s net asset value fell 4.7% during the quarter to $13.11 per share from $13.76 at year-end. Management attributed the decline primarily to unrealized mark-to-market decreases in the portfolio and the company under-earning its distributions during the quarter. Chief Financial Officer Keith Franz said the decline was partially offset by the accretive effect of share repurchases.

Gatto said more than 80% of the downward movement in portfolio marks was unrealized and driven by market-level factors, including movements in comparable public company valuations and broader credit spread widening, rather than “fundamental credit deterioration” at portfolio companies.

Management also addressed broader scrutiny of private credit valuations. Gatto said CION uses four independent third-party valuation providers and that the “vast majority” of the portfolio is subject to full independent review each quarter. He added that third-party macro assumptions and market inputs can sometimes produce marks that do not fully reflect the credit fundamentals of individual positions.

CION said software represented 1.8% of portfolio fair value at quarter-end. President and Chief Investment Officer Gregg Bresner said the company had three software portfolio companies and “no ARR loans” in the portfolio, adding that CION has historically avoided software lending based on recurring-revenue growth methodologies when companies had negative EBITDA at closing.

Portfolio Credit Metrics Remain Stable, Management Says

Management described portfolio credit performance as stable despite broader concerns about stress in private credit. Gatto said weighted average interest coverage across the debt portfolio was 2.08 times, while weighted average net leverage was 4.62 times, essentially flat from 4.7 times in the prior quarter.

CION’s weighted average internal risk rating was 2.08, compared with 2.09 in the fourth quarter. Risk-rated four investments declined to 1.55% of the portfolio at fair value from 1.9% in the fourth quarter, while risk-rated five investments remained 0.54% of the portfolio. The company recorded seven upgrades and eight downgrades during the quarter.

Non-accruals improved to 1.53% of fair value as of March 31, down from 1.78% in the fourth quarter. On an amortized cost basis, non-accruals rose to 5.35% from 4.32%. The company added Lux Credit Consultants to non-accrual status during the quarter, but management said the company was sold after quarter-end and is expected to be removed from non-accrual in the second quarter.

Bresner said the first-lien portion of the portfolio remained central to CION’s defensive positioning, with approximately 81% of the portfolio in first-lien investments. Approximately 98% of the portfolio was risk-graded three or better at quarter-end.

Investment Activity Focused on Existing Portfolio Companies

CION made approximately $69 million in investment commitments during the first quarter across two new and nine existing portfolio companies, of which $54 million was funded. The company also funded $12 million of previously unfunded commitments. Sales and repayments totaled $38 million, including full repayment of first-lien holdings in IMW and The Men’s Wearhouse. Net funded investments increased by about $28 million during the quarter.

New portfolio companies included Anchor QEA and Dependable Acquisition, which Bresner described as specialty business service providers. Add-on investments and secondary purchases were made in existing portfolio companies including American Clinical, Carestream Health, Coinmach, David’s Bridal, HealthWay, Juice Plus+, STAT-MED, Stengel Hill and WorkGenius.

Bresner said CION remained selective in new originations, citing credit and pricing considerations. He said new-issue market pricing continued to reflect substantial private debt fundraising in 2024 and 2025, resulting in lower coupon spreads, higher leverage and looser credit documents. The weighted average yield for new direct first-lien investments during the quarter was equivalent to SOFR plus 6.1%, based on investment cost.

The company also highlighted unrealized valuation declines in Lux Credit, FuseFX, Labgear, SIMR Statin Med and the common equity of David’s Bridal. Bresner said some other investments, including Longview Power, Hollander, TriMark, Avison Young and Nova Compression, saw mark increases due to stronger performance and outlook.

Balance Sheet, Leverage and Distributions

At March 31, CION had total assets of approximately $1.8 billion, net assets of $660 million, total debt outstanding of $1.2 billion and 50.3 million shares outstanding. The portfolio at fair value was $1.7 billion. The weighted average yield on debt and other income-producing investments at amortized cost was 10.4%, down from 10.7% in the fourth quarter.

Franz said the company ended the quarter with more than $100 million in cash and short-term investments and another $100 million available under credit facilities. Approximately 75% of debt capital was unsecured and 25% was senior secured bank debt. About 60% of debt capital was floating rate.

Net debt to equity increased to 1.62 times from 1.44 times at year-end. Franz said the increase reflected the decline in NAV and higher average debt outstanding during the quarter. The weighted average cost of debt capital was 7.52%, slightly higher than in the fourth quarter.

During the quarter, CION issued $135 million of 7.5% senior unsecured notes due 2031, which trade on the New York Stock Exchange under the ticker CICC. A portion of the proceeds was used to repay $100 million under the company’s JPMorgan credit facility at the end of March.

In response to an analyst question, Franz said the company’s leverage target is around 1.30 to 1.35 times, though he acknowledged CION is currently above that range. He said the company expects to use portfolio sales, repayments and refinancing activity to reduce leverage “over the next couple of quarters.”

CION repurchased approximately 1.1 million shares during the quarter at an average price of $8.71. Gatto said management believes current prices offer an opportunity to repurchase shares at a meaningful discount to fair value while also seeking to reduce leverage.

The company paid monthly base distributions totaling $0.30 per share during the first quarter and declared third-quarter base distributions totaling $0.30 per share, payable at $0.10 per share per month in July, August and September.

About CION Investment NYSE: CION

CION Investment Corporation is a closed‐end, non‐diversified management investment company organized as a business development company under the Investment Company Act of 1940. Externally managed by CION Investment Management, LLC, the firm specializes in providing flexible capital solutions to U.S. and Canadian middle‐market companies. By combining debt and equity financing, CION seeks to support growth, acquisitions, recapitalizations and other strategic initiatives for its portfolio companies.

The company’s investment strategy centers on senior secured loans, subordinated debt and private equity interests.

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