Earnings call transcript: Runway Growth Finance beats Q3 2025 estimates

Runway Growth Finance Corp (RWAY) reported strong Q3 2025 earnings, exceeding analyst expectations with an earnings per share (EPS) of $0.43, surpassing the forecasted $0.3954 by 8.75%. The company also reported revenue of $36.75 million, higher than the anticipated $35.09 million, marking a 4.73% surprise. Following the earnings release, the stock saw a modest aftermarket increase of 0.61%, reaching $9.84.

Key Takeaways

• Runway Growth Finance exceeded EPS and revenue forecasts for Q3 2025.
• The company's debt portfolio yield increased to 16.8% from 15.4% in Q2.
• A merger with SWK Holdings is expected to close in early 2026, enhancing portfolio diversification.
• The stock price saw a slight increase in aftermarket trading following the earnings announcement.

Company Performance

Runway Growth Finance showcased a robust performance in Q3 2025, driven by strategic investments and an increase in debt portfolio yield. Despite a challenging venture debt market, the company managed to expand its investment capabilities, particularly in the healthcare and technology sectors. The fair value of the total investment portfolio was reported at $946 million, reflecting a 7.7% decrease from Q2, attributed to market conditions.

Financial Highlights

• Total investment income: $36.7 million (Q3 2025)
• Net investment income: $15.7 million
• Debt portfolio yield: 16.8%
• Net assets: $489.5 million
• NAV per share: $13.55 (1.9% decrease from Q2)

Earnings vs. Forecast

Runway Growth Finance reported an EPS of $0.43, beating the forecast of $0.3954 by 8.75%. Revenue came in at $36.75 million, surpassing expectations by 4.73%. This marks a significant achievement for the company, indicating strong operational management and strategic investment decisions.

Market Reaction

Following the earnings release, Runway Growth Finance's stock experienced a slight aftermarket increase of 0.61%, with shares trading at $9.84. This movement reflects investor confidence in the company's ability to outperform expectations, despite broader market volatility. The stock remains within its 52-week range, with a low of $8.35 and a high of $11.73.

Outlook & Guidance

Looking forward, Runway Growth Finance anticipates the completion of its merger with SWK Holdings in early 2026, which is expected to scale the portfolio by an estimated $242 million. The company forecasts mid-single-digit net investment income accretion and modest return on equity (ROE) expansion. The dividend remains steady at $0.33 per share.

Executive Commentary

"Despite a challenging deal environment and significant changes to the venture ecosystem, we've always been proactive in positioning the platform to compete with the best in the business," said David Spreng, CEO. He added, "We believe the acquisition of SWK will immediately scale our portfolio by an estimated $242 million, accelerating growth and diversification."

Risks and Challenges

• Market volatility and economic uncertainty could impact portfolio valuations.
• Spread compression in the venture debt market may affect yield opportunities.
• Execution risks associated with the SWK Holdings merger.
• Potential challenges in refinancing at lower capital costs for some companies.
• Dependence on floating-rate assets, which could be affected by interest rate fluctuations.

Q&A

During the earnings call, analysts questioned the potential impact of muted Q4 repayments on future performance. Management highlighted the slightly higher yield of the SWK portfolio and the potential to upsize the best loans. They also discussed structured PIK options for growth companies and emphasized careful underwriting with a focus on loan-to-value ratios.

Full transcript - Runway Growth Finance Corp (RWAY) Q3 2025:

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Runway Growth Finance third quarter 2025 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, Investor Relations, Runway Growth Finance: Thank you, Operator. Good evening, everyone, and welcome to the Runway Growth Finance conference call for the quarter ended September 30, 2025. Joining us on the call today from Runway Growth Finance are David Spreng, Chief Executive Officer; Greg Greifeld, Chief Investment Officer of Runway Growth Capital, our Investment Advisor; and Tom Raterman, Chief Financial Officer and Chief Operating Officer. Runway Growth Finance's third quarter 2025 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.

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, and 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.

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

David Spreng, Chief Executive Officer, Runway Growth Finance: Thank you, Quinlan, and thanks, everyone, for joining us this evening to discuss our third quarter 2025 financial results. Today, I'll discuss our third quarter financial highlights, provide an update on our strategy and growth levers, and recap our recently announced definitive merger agreement to acquire SWK Holdings. Greg will discuss our portfolio optimization initiatives and activity, and to conclude, Tom will dive deeper into our financial performance. As I step back and look at what we have accomplished here at Runway Growth Finance since our IPO back in 2021, I'm incredibly proud. Despite a challenging deal environment and significant changes to the venture ecosystem, we've always been proactive in positioning the platform to compete with the best in the business. We have demonstrated our acumen as a strong investor and operator that is dedicated to building an optimal portfolio for our shareholders while remaining disciplined.

This has taken the form of both organic and inorganic deal execution to date, and we will continue to evaluate all options that will enhance the platform. For the third quarter, Runway delivered total investment income of $36.7 million and net investment income of $15.7 million. Additionally, we completed 11 investments in new and existing portfolio companies across the high-growth verticals of technology, healthcare, and select consumer sectors, representing $128.3 million in funded loans. We believe our third quarter investment activity is only beginning to show the benefits of our integration within the BC Partners credit ecosystem, which allows us to source from a broader set of origination channels and strengthen our ability to execute against our portfolio optimization initiatives. As a reminder, these initiatives include.

Further enhancing the risk profile of our portfolio through diversification and smaller position sizes, expanding our suite of financing solutions, and maximizing our existing commitments through robust monitoring and diligent risk mitigation. Inorganic growth is also a key lever available to us as a part of the BC Partners credit platform, which we believe sets us apart from our peers. For context, BC Partners credit has been one of the most active players in BDC consolidation to date. Their experience and our combined network give us an edge in identifying and evaluating attractive portfolios that may be a fit in driving Runway's growth. To that end, in early October, we were excited to announce Runway entered into a definitive merger agreement to acquire SWK Holdings, a specialty finance company with a focus on healthcare and life sciences. SWK provides minimally diluted financing to small and mid-sized commercial-stage healthcare companies.

To reiterate, we think this deal makes both strategic and financial sense for Runway. We believe the acquisition of SWK will immediately scale our portfolio by an estimated $242 million, accelerating growth and diversification. Expand our position and investment capabilities in healthcare and life sciences sector. And enhance both our earnings power and overall financial profile, as Tom will discuss in more detail. With ever-increasing competition across private markets, we believe this transaction positions us to grow and diversify our asset base and continue delivering value for our shareholders and borrowers. While SWK is a prime example of a complementary investment strategy, we will continue to evaluate all opportunities that align with our disciplined approach to inorganic growth. With that, I'll turn it over to Greg to provide a deeper look at our portfolio activity and outlook on venture debt.

Greg Greifeld, Chief Investment Officer, Runway Growth Capital: Thanks, David, and good evening, everyone. I'll expand a bit on our portfolio activity and how the SWK transaction progresses our objective to diversify our investments by size and industry. As David mentioned, our team is consistently assessing our portfolio and the venture landscape to ensure we are finding the best avenues to deliver attractive risk-adjusted returns for our shareholders. This includes maximizing our existing investments, completing new investments, and adding to the portfolio through inorganic channels. As David mentioned, during the third quarter of 2025, Runway completed 11 investments in new and existing portfolio companies, representing $128.3 million in funded loans. These investments include the completion of a new $10 million investment to Federal Hearings and Appeals Services, funding $7.5 million at close, and the completion of a new $10 million investment to DigiCert Inc., funding $9.3 million at close. We also completed investments totaling $97.9 million.

To existing portfolio companies: Kin Insurance, Madison Reed, and Skillshare, and completed follow-on investments with an aggregate amount of $6.9 million to five existing portfolio companies. We'd like to call out that we have reduced our positions in Kin Insurance and Skillshare, which aligns with our strategy to decrease our average hold size. Lastly, we completed a $6.7 million equity investment to Runway Kadma One, our joint venture with Kadma Capital Partners. Turning to our acquisition of SWK, we are immediately scaling our position in the highly attractive healthcare and life sciences sector. The transaction will increase Runway's exposure in the sector to approximately 31% of the overall portfolio at fair value from 14% as of September 30, 2023. As a reminder, we are focused on the following three key industries: healthcare and life sciences, technology, and select consumer sectors.

This transaction expands our commitment to the healthcare and life sciences industries, which we believe is defensive by nature of high barriers to entry given the time and investment needed for FDA approvals, as well as limited downside risk and excellent risk-adjusted returns. To give you a sense of SWK's complementary portfolio, I'd like to highlight two standout investments: SkinV and Journey Medical. SkinV is a highly integrated prescription system dedicated to delivering customized medications for dermatology patients. SWK's $16 million financing has helped the company expand its product offerings, increase its manufacturing capacity, and rapidly grow sales. Journey Medical is a publicly traded company focused on identifying, acquiring, and strategically commercializing innovative differentiated dermatology products through its efficient sales and marketing model. SWK's $25 million financing helped the company launch Emrosi, an innovative rosacea treatment.

These companies are exemplary of the high-quality additions to our portfolio as we solidify our standing as a destination of choice for growth investment. Looking ahead, we believe our transaction with SWK is timely and further positions Runway as a serious participant in the consolidation of the venture and growth lending markets. We believe this deal demonstrates our ability to structure, win, and complete transactions, utilizing both cash and equity to drive scale and enhance our market position. Further, it provides a repeatable yet flexible blueprint that is non-dilutive to shareholders. Now, I want to turn the call over to Tom to share more on our financial results.

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: Thank you, Greg, and good evening, everyone. Turning now to the third quarter results, we generated total investment income of $36.7 million and net investment income of $15.7 million in the third quarter of 2025, an increase compared to $35.1 million and $13.9 million in the second quarter of 2025. Our weighted average portfolio risk rating increased to 2.42 in the third quarter of 2025 compared to 2.33 in the second quarter of 2025. Our rating system is based on a scale of 1 to 5, where 1 represents the most favorable credit rating. As with previous quarters, we calculated the loan-to-value ratio for our loans in our portfolio at the end of the second quarter and at the end of the third quarter. Our dollar-weighted loan-to-value ratio increased from 29.6% to 31.4%.

Our total investment portfolio had a fair value of $946 million, a decrease of 7.7% from $1.02 billion in the second quarter of 2025. Our loan portfolio is comprised of 97% floating-rate assets. To reiterate, we've structured our portfolio to be comprised almost exclusively of first-lien senior secured loans, reflecting our focus on risk mitigation and diligent portfolio management. We continued to cover our base dividend of $0.33 per share, delivering $0.43 of net investment income in the third quarter. Earnings for the quarter benefited from elevated prepayment income. At the end of the third quarter, we had spillover income of approximately $0.53 per share. Our debt portfolio generated a dollar-weighted average annualized yield of 16.8% for the third quarter of 2025, increasing from 15.4% quarter over quarter and increasing from 15.9% for the comparable period last year.

Moving to our expenses, total operating expenses were $21 million for the third quarter of 2025, a decrease from $21.2 million for the second quarter of 2025. We recorded a net realized loss on investments of $1.3 million in the third quarter of 2025 compared to a net realized loss on investments of $1.5 million in the second quarter of 2025. During the third quarter, we experienced seven repayments totaling $199.7 million and scheduled amortization of $1.5 million. As of September 30, 2025, we had only one loan on non-accrual status to Mingle Healthcare. This loan has a cost basis of $4.8 million and fair market value of $2.4 million, or 50% of cost, representing just 0.2% of the total investment portfolio at fair value as of September 30, 2025.

As of September 30, 2025, Runway had net assets of $489.5 million, decreasing from $498.9 million at the end of the second quarter of 2025. NAV per share was $13.55 at the end of the third quarter, a decrease of 1.9% compared to $13.66 at the end of the second quarter of 2025. At the end of the third quarter of 2025, our leverage ratio and asset coverage were 0.92 and 2.09 times, respectively, compared to 1.05 and 1.95 times, respectively, at the end of the second quarter of 2025. As of September 30, 2025, our total available liquidity was $371.9 million, including unrestricted cash and cash equivalents, and we had borrowing capacity of $364 million.

As of September 30, 2025, we had a total of $143.7 million in unfunded commitments, which was comprised of $120.9 million to provide debt financing to our portfolio companies and $22.7 million to provide equity financing to our JV with Kadma. Approximately $30.3 million of our unfunded debt commitments are eligible to be drawn based on achieved milestones. Additionally, as of September 30, 2025, Runway had total assets of $963.3 million, which would have adjusted the fourth quarter 2025 base management fee paid to our external advisor to 1.6% per annum. However, the advisor has agreed to maintain the base management fee at 1.5%. I'd like to expand on David and Greg's commentary and reiterate how we believe our proposed acquisition of SWK enhances our financial profile and grows our shareholder base. As a reminder, we anticipate enhanced earnings power supported by the following key drivers.

First, by scaling up our portfolio to $1.2 billion on a September 30 pro forma basis. Second, by optimizing our leverage profile at approximately 1.1 times, or the middle of our target range. Third, by benefiting from an attractive target portfolio that offers incremental yield relative to Runway's existing portfolio. Fourth, through greater expense efficiency as a result of our increased scale. We anticipate this transaction will generate mid-single-digit run-rate net investment income accretion during the first full quarter following the close and support modest ROE expansion, as well as improved dividend coverage. Notably, upon close, this transaction will more than offset the repayment impact our portfolio experienced last quarter. This will contribute to preserving earnings power, maintaining our dividend, and ensuring we are on the right trajectory even as shifting rates and a changing venture debt landscape impact the sector.

As previously disclosed, the transaction will be a NAB-for-NAB merger structured as a tax-free reorganization with an estimated purchase price of approximately $220 million. Consideration includes $75.5 million in Runway shares valued at closing NAB per share and approximately $145 million in cash. In support of the transaction and our shareholders, our external investment advisor is also contributing $9 million in cash as part of the consideration. To provide perspective, this significant contribution from the advisor equates to a fee waiver of nearly three full quarters when calculated on a pre-tax basis. As a result of our expanded shareholder base and trading liquidity, Oaktree's percentage ownership position will be reduced. Oaktree has been an exceptional partner to Runway on our path to becoming a public BDC, and we believe this transaction will drive liquidity in our shares and we hope begin to lift trading levels.

Lastly, in tandem with enhancing earnings power, we are lowering our risk profile demonstrated by sector diversification and what we expect to be smaller average loan size of 2%. Improved diversification and scale should enhance our access to new debt financing markets, including ABS and other secured lending markets. Taking into consideration the ongoing government shutdown, we expect delays in the SEC regulatory approval process. We anticipate the close to take place in early 2026. As previously disclosed, on May 7, 2025, our Board of Directors approved a new stock repurchase program of $25 million, which will expire on May 7, 2026, or earlier if we repurchase the total amount of stock authorized for repurchase under the program. During the third quarter, we repurchased 397,983 shares.

We'd like to note that our use of the share repurchase program during the quarter was limited as a result of the blackout period associated with the SWK transaction. Finally, on November 6, 2025, our board declared a regular distribution for the fourth quarter of $0.33 per share. With that, Operator, please open the line for questions.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. One moment while we compile the Q&A roster. Our first question will come from the line of Melissa Wettle with JPMorgan. Your line is open.

Melissa Wettle, Analyst, JPMorgan: Thank you. I appreciate you taking my questions tonight. First, I appreciate the update on the expected closing date of the SWK merger. Given that that is now likely to be in 2026 close date, how should we be thinking about origination activity and repayment activity in 4Q? Should we be thinking about that as sort of a net exit quarter ahead of the onboarding of the other portfolio?

David Spreng, Chief Executive Officer, Runway Growth Finance: Yeah. I would say in terms of repayments, I do think it will be relatively muted relative to Q3 quarter. We definitely did see an elevated amount, and I would expect some of those or we had expected some of those repayments in Q4, but ultimately came in Q3. In terms of origination, we're utilizing the pipeline we have as well as the broader BC Partners credit platform and seeing many interesting opportunities out there in the market.

Melissa Wettle, Analyst, JPMorgan: Okay. Appreciate that. As a follow-up, when we think about the integration of the two portfolios, obviously the existing portfolio is multiples larger than the one that you'll be onboarding and integrating. Can you give us a sense of the yield profile between the two and where you expect that to sort of shake out once the two are combined? Thanks.

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: The yield profile will be slightly greater. The SWK portfolio has a slightly higher yield than our portfolio, and we'll have complete pro formas in the N-14 when filed shortly.

David Spreng, Chief Executive Officer, Runway Growth Finance: I think one other thing to highlight too about the SWK portfolio, as you said, it is dollar-wise smaller than ours. There is a degree to which they were limited with capital constraints in terms of some of the positions. I think you should expect, once we do move closer to closing, us re-exploring where there are opportunities to upsize the best loans in their portfolio in order to get some organic growth out of this deal as well.

Operator: Thank you. One moment for our next question. That will come from the line of Mickey Schlein with Clear Street. Your line is open.

Mickey Schlein, Analyst, Clear Street: Yes. Good evening, everyone. I want to start off by asking about which were the portfolio companies that were the main drivers of the realized loss and the unrealized portfolio depreciation. Do these reflect problems of specific sectors, or was it more idiosyncratic?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: Those losses were mainly in the equity portfolio.

Mickey Schlein, Analyst, Clear Street: Is there some theme across the equity portfolio that drove those losses?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: There were some expirations of warrants. There was liquidation of some IPO shares at less than the carrying cost. There really was not any specific theme. Most of them were completely idiosyncratic.

Mickey Schlein, Analyst, Clear Street: Fair enough. You discussed the prepayment activity in your remarks, but could you provide us some color on what's driving that activity? Do you expect that to continue next year?

David Spreng, Chief Executive Officer, Runway Growth Finance: Yeah. In terms of the activity, I would say that there's a degree to which we're seeing M&A remain active across our portfolio companies. There's a degree to which some of our companies have outgrown our cost of capital and found refinancing options with younger or rather with cheaper options. I would say, in general, repayments are a double-edged sword where at some point you do need to get paid back. While you do also want to keep the best names on your book. I would say we do expect a normal course of prepayments to occur from here on out as well.

Mickey Schlein, Analyst, Clear Street: Okay. On the flip side, obviously, we're very active in terms of investments. With increased sourcing from BC Partners, could you share with us perhaps some idea of what share of the recent deals came from that ecosystem? How do those opportunities differ from your legacy pipeline?

David Spreng, Chief Executive Officer, Runway Growth Finance: Yeah. I'd say that there's definitely a good split between the two. I'd say we're still very actively focused in terms of our legacy pipeline and focus, and that's what we here spend all day, every day doing. I would say where we'll look to share opportunities with them will be a circumstance where the check is something larger than we would want to write in terms of the BDC's optimal hold size. In terms of things that they'll share with us, we're not looking for any type of style drift or anything like that. Things that they show us are firmly within the three sectors that we deal with: healthcare, technology, and as well as select consumer. They have to meet our ethos of being growth-stage businesses, while generally larger than we'll deal with.

They have to meet the structural and return profile that matches our portfolio. I would say we are definitely showing them things. In terms of what we are choosing to put in our book that they are showing us, it is the deals that firmly look, smell, and feel like Runway deals.

Mickey Schlein, Analyst, Clear Street: That's really helpful. To follow up, we've seen very intense competition in the liquid markets and, to some extent, in the more conventional direct lending markets. Could you describe the competitive dynamics and the pricing pressures in the venture debt space currently?

David Spreng, Chief Executive Officer, Runway Growth Finance: Yeah. I would say that we have seen a degree of spread compression, but definitely nowhere near what I think has been seen in the broader middle market as well as broadly syndicated markets. I think that as rates do drop as well, we have seen less pressure on spreads. It is something I think will continue in this new rate environment.

Mickey Schlein, Analyst, Clear Street: That's interesting. Just a couple of questions on the merger. Could you give us a sense of how you plan to integrate the SWK team into your platform? Let's leave it at that. How do you expect to integrate the SWK team?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: The SWK team, Mickey, will join us for transition services to help us move that portfolio onto the BDC's platform. They'll help with the BDC and origination during this time period. We'll see how things move after that. Initially, it will be assisting with the transition, assisting with the portfolio relationships, and assisting with new originations in the space for the BDC, assisting the BDC with that.

Mickey Schlein, Analyst, Clear Street: Okay. My last question. I'm not sure whether it's been discussed, but are the SWK shareholders locked up post-merger? If they are, what is the schedule of the lockups?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: There's no lockup per se. We do have a key shareholder agreement, and we've outlined the key elements of that shareholder agreement in our SEC filings. There is no specific lockup.

Mickey Schlein, Analyst, Clear Street: Okay. I understand. Again, thank you for taking my questions. That's it for me this evening.

Operator: Thank you. One moment for our next question. That will come from the line of Casey Alexander with Compass Point Research. Your line is open.

Casey Alexander, Analyst, Compass Point Research: Hi. Good evening. Thank you for taking my questions. First off, earlier today, you declared a dividend of $0.33 a share, and yet net investment income per share was $0.43 a share. Usually, there is some relative attachment between the earnings power and the dividend. I'm a little curious how to take that, that you did not add on any special distribution. Should we be thinking of that dividend as looking forward to your earnings power in the fourth quarter because of the substantial paydowns? Or how did the board go about making that decision?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: Thanks, Casey, for that question. As you remember, when we rebased and reset the dividend earlier this year, we looked at the earnings power of the portfolio with the anticipation of several things. One was we knew we were going to have a heavy year of prepayments weighted toward the back end of the year. Second, that we were likely to see several decreases in the interest rates. As we said it, we said that we would pay up to 50% of the delta between NII per share and the base dividend. As we look forward, we had $0.10 per share in prepayment-related income during Q4. As you look forward into Q4, as we rebuild.

The portfolio, which doesn't happen overnight, deals tend to close at the end of the quarter, so you don't get the benefit of the earnings from the new asset. We're looking at covering the base dividend with Q4 earnings.

Casey Alexander, Analyst, Compass Point Research: Okay. And secondly, the SWK team, do they currently have the ability to make new loans? And if they do, do you guys have any say on any new loans that they would make?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: As you might expect, as part of the merger agreement, there are interim operating covenants. While they are still an independent company, any modifications to loans are worked through with Greg and his team and our investment committee. In all likelihood, we would look at doing any upsizes or new opportunities either jointly or as part of the Runway portfolio going forward.

Casey Alexander, Analyst, Compass Point Research: Okay. Thank you. All right. Thanks for taking my questions.

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: Thanks, Casey. Appreciate you being on tonight.

Operator: One moment for our next question. That will come from the line of Eric Zwick with Lucid Capital Markets. Your line is open.

Casey Alexander, Analyst, Compass Point Research: Thanks. Good evening. Just curious if you could provide any characteristics of the loan that you added to the Kadma JV and why it was a good fit for that vehicle as opposed to your primary portfolio.

David Spreng, Chief Executive Officer, Runway Growth Finance: Yeah. It was a loan that definitely is firmly a growth loan. I do not believe that we have explicitly named the portfolio within it. In general, you are going to see either some partial allocations of loans that we have done in the BDC, but you will also see some other deals that are very similar to runway loans, but for one reason or another are better suited to come into there.

Casey Alexander, Analyst, Compass Point Research: Switching gears just a little bit, the PIK income is, I guess, in the quarter comprised about 11.5% of total investment income. Can you provide just a breakdown between what is, if there is any kind of split between structured PIK versus credit-related PIK and just kind of any thoughts on the overall level of the contribution?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: As you know, there's good pick and there's bad pick. I don't have the number at my fingertips, but in this quarter, there are a number of transactions that had structured pick as a part of it. There were two deals in the fourth quarter of 2024 that had structured pick going forward. That is not the entirety of the loan, but is a portion of the loan.

Casey Alexander, Analyst, Compass Point Research: Okay. That's helpful. How long is that? If it's at the beginning structured, how long is that usually provided for that they pay pick? I assume it kind of rolls off after a certain period of time. Is that correct?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: That's correct. Greg can give a little more insight because it's really varied on a deal-by-deal basis. It's quite bespoke, based on the cash flow characteristics of the borrower.

David Spreng, Chief Executive Officer, Runway Growth Finance: Yeah. I'd say in general, as you highlighted, there's a portion of the loans where we will structure it that they can have a partial PIK toggle for one or two years. As you can imagine, the companies typically, if not always, opt for the PIK while it's offered. Depending on either the competitive nature of the deal or the cash flow dynamics of the business, we might allow for 1% or 1.5% of the overall interest rate to be paid for PIK for the life of the loan.

Casey Alexander, Analyst, Compass Point Research: I can see the attractiveness, especially for a growth company to have that PIK toggle at the beginning to have more cash to help supplement growth. I guess from your perspective, when you structure that in, do you underwrite any differently versus a loan that does not have PIK in it?

David Spreng, Chief Executive Officer, Runway Growth Finance: Yeah. We are incredibly focused on loan-to-value. To that point, as you accrue the PIK, you have obviously increased the size of the loan. We will do an incremental analysis to make sure that we are comfortable with the loan-to-value once the total PIK has accrued over the life of the loan, so that we do not create any issues with ourselves in terms of getting out over our skis with loan-to-value through accrued PIK.

Casey Alexander, Analyst, Compass Point Research: Yep. That makes a lot of sense. Thanks for taking my questions.

David Spreng, Chief Executive Officer, Runway Growth Finance: Thanks.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 11. Our next question comes from the line of Christopher Nolan with Lattenberg Salmon. Your line is open.

Mickey Schlein, Analyst, Clear Street: Hey, guys. Do you expect the deal to be accretive in 2026?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: We do. It should be accretive in the first full quarter after closing. We're hopeful that we'll get this closed as early in Q1 as possible. Some of that's really out of our control at this point with the government shutdown and the number of days that they have to review our filings.

Mickey Schlein, Analyst, Clear Street: For a merger like this, correct me if I'm wrong, but all the investment assets of the acquired company are marked at fair value. Did you guys reevaluate that fair value? If so, is there the possibility of some OID accretion or discount accretion following the deal close?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: You have been sitting in the meetings. You must have our offices bugged because those are things that we're looking at right now, Chris. Yeah, there is the possibility. We will set now the way the price is determined at closing, the value is determined at closing, as there's a fair value mark prepared by SWK. We will adopt that fair value mark, and that's then compared to effectively the look-through price. There is the prospect for some OID accretion over time.

Mickey Schlein, Analyst, Clear Street: Great. Two more questions. One, is the shares going to be issued based on NAV per share, Runway's NAV, or on the current Runway share price?

Tom Raterman, Chief Financial Officer and Chief Operating Officer, Runway Growth Finance: No, it will be a NAV for NAV merger. So it'll be issued at our current NAV determined 48 hours before closing.

Mickey Schlein, Analyst, Clear Street: Final question. What stage development is the typical companies that SWK invests in, please?

David Spreng, Chief Executive Officer, Runway Growth Finance: Yeah. I would say SWK targets pretty much the same space that we're in. When you look at the scale of the businesses, most of them are generating meaningful revenue, still in growth phase, so still pre-profit for the most part. I would say that there really is a tremendous amount of strategic overlap. As we've looked at their book and really gotten to know it, it does have a lot of the same structural elements and just underwriting ethos that we see in our existing healthcare and life sciences book. These companies will be right at home in our portfolio.

Mickey Schlein, Analyst, Clear Street: Got it. Okay. Thank you.

Operator: Thank you. That is all the time we have for question and answers. I would now like to turn the call over to Mr. David Spreng for any closing remarks.

Thank you, operator. We look forward to making continued strides on the objectives we outlined upon joining the BC Partners Credit Platform. Thank you all for joining us today, and we will see you in the new year to discuss our fourth quarter 2025 financial results.

This concludes today's program. Thank you all for participating. You may now disconnect.

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