Runway Growth Finance NASDAQ: RWAY reported lower first-quarter investment income and net investment income as portfolio repayments, slower originations ahead of the SWK transaction closing and new non-accrual loans weighed on results.
The business development company generated total investment income of $29.5 million for the quarter ended March 31, 2026, down from $30 million in the fourth quarter of 2025. Net investment income fell to $10.6 million from $11.6 million in the prior quarter, according to Chief Financial Officer and Chief Operating Officer Tom Raterman.
Runway delivered net investment income of $0.29 per share and paid a base dividend of $0.33 per share. Raterman said the company had spillover income of approximately $0.65 per share at quarter-end. The board declared a regular second-quarter distribution of $0.33 per share.
“With respect to the dividend, we believe that it's currently set at an appropriate level,” Raterman said. “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.”
Portfolio value and NAV decline
Runway’s total investment portfolio had a fair value of $886.3 million at the end of the quarter, down 4.4% from $927.4 million at the end of the fourth quarter. Net assets declined to $438.2 million from $485 million, while net asset value per share fell 9.6% to $12.13 from $13.42.
Raterman said a subsequent NAV per share figure of $11.93 disclosed in connection with the SWK closing primarily reflected estimated transaction costs of $7.7 million.
The company’s weighted average portfolio risk rating rose to 2.67 from 2.45 in the fourth quarter. Raterman attributed the change primarily to moving two loans, Marley Spoon and Blueshift, to category 5 and non-accrual status. Excluding those two loans, the weighted average risk rating moved from 2.67 to 2.37. Runway’s rating system uses a scale of 1 to 5, with 1 representing the most favorable credit rating.
During the question-and-answer session, Raterman said changes in fair value that affected NAV were tied primarily to market multiple declines and watchlist names, especially Blueshift and Marley Spoon. He said the full-quarter earnings impact from the new non-accruals would be $0.06 per share in the second quarter.
“We are actively working with the management teams at Marley Spoon, Blueshift, and Mingle Health and seek to achieve optimal outcomes for the portfolio,” Raterman said. “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.”
SWK deal reshapes portfolio mix
Chief Executive Officer and Chief Investment Officer David Spreng said the closing of the SWK transaction last month was “a milestone moment” for investors and the company’s team. He said the acquisition has strengthened Runway’s position in healthcare and diversified the portfolio.
On a pro forma basis, Raterman said Runway’s portfolio is $1.1 billion following the SWK transaction, more than offsetting the impact of repayments in 2025. He said the deal also reduces the average loan size by 11% and increases healthcare and life sciences exposure to 32% of the portfolio and 30% of the debt portfolio, compared with 13% and 12%, respectively, at the end of the first quarter.
Raterman said the SWK portfolio is expected to begin contributing to earnings per share in the second quarter and be fully accretive in the third quarter, noting that the transaction closed on April 6 rather than March 31.
Runway said its top 10 investments accounted for 54% of the portfolio before the SWK transaction and 43% after the closing. Raterman said the portfolio is now more balanced across technology, financials, healthcare and select consumer products and services.
Originations slowed ahead of transaction close
Spreng said Runway temporarily slowed its evaluation of new opportunities during the quarter as it focused on integrating the SWK portfolio and post-transaction balance sheet. He said the company is now positioned to be selective as it evaluates a “robust pipeline.”
During the quarter, Runway completed four investments in new and existing portfolio companies totaling $17.6 million in funded investments. The company also completed an additional debt commitment of $46.3 million to 13 Scents, a digitally native fragrance brand, which it expects to partially fund during the second quarter.
The quarter’s investments included a new $7.5 million investment in HR Pharmaceuticals, a founder-owned medical products platform focused on branded consumable products for acute and home care markets. Runway funded $5.5 million at close, along with $2 million of preferred equity financing. The company also completed three follow-on investments totaling $10.1 million to existing portfolio companies.
Software portfolio remains in focus
Spreng addressed investor scrutiny around software and artificial intelligence disruption, saying media coverage has “failed to recognize the resilience of actual credit performance” despite macroeconomic and rate pressures. He said Runway remains constructive on software and technology and focuses on late-stage companies with mission-critical functions, long diligence and implementation cycles, strong competitive moats, high switching costs and diversified customer bases.
Raterman said more than half of Runway’s portfolio companies are cash flow positive. Within the software portfolio, 62% of companies are cash flow positive, 100% of loans have financial covenants, and 94% of loans are sponsored. He also said every material software investment in the portfolio was reviewed by a third-party valuation specialist in the first quarter.
Liquidity, buyback and leadership changes
Runway ended the quarter with a leverage ratio of 0.98 and an asset coverage ratio of 2.02. Total available liquidity was $372.3 million, including unrestricted cash and equivalents, with $370 million of borrowing capacity under its KeyBank credit facility. Immediately following the SWK transaction close, the company’s pro forma leverage ratio, asset coverage ratio and total available liquidity were approximately 1.2, 1.84 and $231.8 million, respectively.
The company also announced a new $15 million share repurchase program that expires May 7, 2027. Raterman said repurchases are expected to be partly funded by proceeds from loan repayments in coming quarters.
Runway announced several leadership changes. Spreng said JD Tamas joined as managing director of healthcare and life sciences investing following the SWK transaction. Avisha Khubani was promoted to chief credit officer of Runway Growth Capital. Raterman will become vice chairman of Runway Growth Capital effective June 30, 2026, stepping back from his day-to-day CFO and COO roles at the BDC to focus on strategic initiatives. Carmela Thomson, senior vice president of finance and accounting, will become CFO at that time.
About Runway Growth Finance NASDAQ: RWAY
Runway Growth Finance, 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.
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