MidCap Financial Investment Corporation

Non-accrual debt across US-registered business development companies jumped to 1.9% of total debt at cost in Q1 2026, up 52 basis points from the prior quarter, signaling growing borrower distress in private credit. Adjusted non-accrual exposure, counting all debt owed by borrowers with at least one non-accrual tranche, rose to 3.3% of total debt at cost, up 116 basis points from Q4 2025. Among the ten largest publicly traded BDCs, reported non-accrual debt reached 3.95% of total debt at cost in Q2, up 20 basis points, while adjusted exposure rose 54 basis points to 5.95%. The number of borrowers with at least one non-accrual instrument climbed to 356 in Q1 2026, representing 4.69% of all borrowers, up from 4.26% a year earlier. Two borrowers, Medallia and Inovalon, accounted for $4.4 billion of the Q1 2026 non-accrual total.

MidCap Financial Investment Corporation is targeting leverage in the low 1.4s and prioritizing deleveraging over additional stock repurchases. Net investment income per share was $0.40 for the quarter ended June 30, 2026, while GAAP net loss per share was $0.21, and net asset value per share fell 3.2% to $13.37. The portfolio recorded a net loss of $50.3 million, or $0.61 per share, concentrated in a limited number of positions, with five names contributing approximately 80% of the loss. The company repurchased $31.9 million of stock during the quarter but now intends to focus capital allocation on reducing leverage from the current 1.54x net leverage. A quarterly dividend of $0.31 per share was declared, payable on September 24, 2026.