Runway Growth Finance (NASDAQ:RWAY) reported fourth-quarter and full-year 2025 results and provided an update on its pending acquisition of SWK Holdings, which management said is now expected to close in early April. On the company’s earnings call, executives emphasized continued discipline in underwriting amid market volatility, while pointing to an improving origination pipeline and efforts to diversify and reduce portfolio risk.
Fourth-quarter results and portfolio activity
For the fourth quarter, Runway reported total investment income of $30.0 million and net investment income (NII) of $11.6 million. Chief Financial Officer and Chief Operating Officer Tom Raterman said those figures declined from $36.7 million of total investment income and $15.7 million of NII in the third quarter, primarily due to lower prepayment fee income that “returned to more normalized levels.”
Chief Investment Officer Greg Greifeld detailed the quarter’s activity, including:
- A new $20 million investment in a mobility company offering an all-inclusive car subscription service (funding $20 million at close).
- A new $10 million investment in a special purpose vehicle formed by a consumer products investor/operator (funding $10 million at close).
- A new $20 million investment to Shield Therapeutics, with $2 million funded at close.
- Follow-on investments totaling $10.9 million across four existing portfolio companies: Blueshift, Bombora, Autobooks, and Marley Spoon.
Credit quality, yields, and balance sheet metrics
Raterman said the fair value of the total investment portfolio was $927.4 million at quarter-end, down 2% from $946.0 million in the third quarter. The weighted average portfolio risk rating increased to 2.45 from 2.42, on a 1-to-5 scale where 1 represents the most favorable rating.
Runway’s debt portfolio generated a dollar-weighted average annualized yield of 14.2% in the fourth quarter, down from 16.8% in the third quarter and 14.7% in the prior-year quarter. Management again attributed the sequential decline to reduced prepayment-related income.
During the quarter, the company recorded a net realized loss on investments of $377,000, compared with a net realized loss of $1.3 million in the third quarter. Total operating expenses were $18.4 million, down from $21.0 million in the prior quarter.
Raterman noted that Runway had one loan on non-accrual at December 31, 2025: Domingo Healthcare. He said it carried a cost basis of $4.8 million and a fair market value of $2.4 million, representing 0.25% of the total investment portfolio at fair value.
Net asset value (NAV) per share was $13.42 at year-end, down from $13.55 at September 30. Net assets totaled $484.9 million, compared with $489.5 million the prior quarter. Leverage ratio and asset coverage were 0.9x and 2.11x, respectively, versus 0.92x and 2.09x in the third quarter. Total available liquidity was $395.2 million, including unrestricted cash and cash equivalents, with borrowing capacity of $377.0 million.
Dividends, spillover income, and near-term headwinds
Runway produced NII of $0.32 per share in the fourth quarter. The company’s base dividend for the quarter was $0.33 per share, and management said spillover income at year-end was approximately $0.65 per share.
Looking to the first quarter of 2026, Raterman said the company expects a $0.02 headwind from a one-time charge related to the full redemption of Runway’s 8% notes and a partial redemption of its 7.5% notes, both due in 2027. He added that the timing delay in closing the SWK transaction is expected to contribute to “some softness” in first-quarter 2026 earnings. Despite that, he said management believes the dividend is set at a sustainable level, while the board will continue to evaluate future distributions.
On February 25, 2026, the board declared a regular distribution for the first quarter of 2026 of $0.33 per share, according to management.
SWK acquisition: timing, portfolio composition, and expected benefits
Spreng said Runway’s acquisition of SWK Holdings, announced in the fourth quarter, is now expected to close in early April, with management’s confidence in closing unchanged. Executives described the transaction as a way to diversify the portfolio and increase exposure to healthcare and life sciences.
In response to an analyst question, Raterman said the SWK portfolio expected to come over at closing includes “13 loans with a fair value of around $235 million,” as well as equity positions, warrants, and a small number of remaining royalties. He said the aggregate yield on the total portfolio is about 14%, while the debt-only portfolio yield is about 16%.
Raterman also outlined expected changes to portfolio construction after the transaction. Following the close, Runway expects to reduce average position size to $23.5 million, or 2.2% of the portfolio, compared with $30.3 million, or 3.1%, before the BC Partners transaction referenced on the call. He said management expects the SWK deal to generate “run rate net investment income accretion in the mid-single digits,” support “modest ROE expansion,” and improve dividend coverage. He also said the combined platform could expand access to new debt financing markets, including ABS and other secured lending markets.
Raterman told analysts pro forma leverage post-SWK is expected to be “just under 1.2,” and management views 1.2 to 1.3 as its fully levered run rate.
Origination outlook, competition, and other updates
Management characterized early first-quarter origination activity as encouraging despite seasonality. Spreng said the pipeline is stronger than it was at the same point last year, citing the impact of BC Partners on deal flow. He also said he expects to complete at least one deal per quarter alongside BC Partners going forward, and described SWK as an opportunity to “upsize the loans that they have to their base.”
Greifeld added that uncertainty in public markets has helped private credit sourcing, noting that a weaker IPO environment can push companies toward alternative financing. He said Runway expects SWK to be additive to sourcing, particularly in healthcare.
On competitive dynamics, Spreng said attractive returns were emerging “particularly in software and in consumer,” but emphasized the company’s conservative underwriting posture, noting that Runway may walk away when others offer aggressive terms.
Greifeld also discussed how Runway approaches software lending, describing portfolio companies as providing “mission-critical functions” with long diligence cycles, “strong moats” with high switching costs, and customer diversification. He said software portfolio metrics were on “solid footing,” with consistent revenue growth and stable loan-to-value ratios.
During the Q&A, Greifeld addressed Circadence, saying the company closed an equity round and signed a substantial Department of Defense contract—developments he said could improve performance, while noting the credit remains under watch.
On capital markets activity, Raterman said Runway launched an underwritten public offering of $103.25 million of unsecured notes due February 2031 at 7.25%, and used proceeds to redeem all 8% notes and a portion of the 7.5% notes due 2027, extending maturities and seeking to lower funding costs.
Raterman also said the company was unable to use its stock repurchase program during the quarter due to restrictions tied to the pending SWK acquisition and related filings. He indicated repurchases remain an important capital allocation tool, but the existing authorization will expire before the blackout window opens; management expects to revisit the program with the board after the transaction closes.
Runway also provided an update on its JV with Cadma. Raterman said the JV currently has a couple of deals and the company expects the first distribution from the JV in the second quarter, which would flow through the Q2 income statement.
Runway said it plans to discuss first-quarter 2026 results in May.
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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