MidCap Financial Reports $90M Merx Capital Repositioning, Sees Higher Net Interest Income Potential

MidCap Financial Investment Corporation has outlined a $90M redeployment of Merx capital and signaled higher net investment income (NII) potential as the company repositions its portfolio. The move comes as the company reports Q2 2025 earnings. The appointment of Kenny Seifert as CFO and transition of former CFO Greg Hunt to an advisory role through the end of the year were also announced.

MidCap Financial Investment Corporation (MFIC) has announced a significant strategic move, outlining a $90M redeployment of Merx capital and signaling higher net investment income (NII) potential. This comes as the company reports its Q2 2025 earnings. The appointment of Kenny Seifert as CFO and the transition of former CFO Greg Hunt to an advisory role through the end of the year were also announced.

In the earnings call, MFIC's CEO, Tanner Powell, reported a net investment income (NII) per share of $0.39 for the June quarter and a GAAP net income per share of $0.19. The net asset value (NAV) per share was $14.75 at the end of June, down 1.2% sequentially. Powell emphasized that the decline in NAV was primarily due to a handful of positions experiencing company-specific challenges, partially offset by gains from Merx and NII slightly exceeding the dividend.

MFIC made $262 million in new commitments across 29 transactions during the June quarter, with over half to existing portfolio companies. Powell highlighted the "power of incumbency, particularly in a muted M&A environment." Regarding Merx, Powell detailed that the company sold one aircraft, resulting in an $8.5 million paydown to MFIC. Post-quarter-end, Merx successfully completed a sales transaction covering the majority of its aircraft, resulting in a modest write-up on the investment.

Insurance proceeds related to detained aircraft in Russia totaled $30.9 million in July, bringing total recoveries to $47.4 million. Powell stated that Merx will be repaying approximately $90 million to MFIC on a net basis in the September quarter, reducing MFIC's investment by nearly half. He projected that redeploying this capital is expected to generate approximately $0.06 per share in additional annual net investment income.

The new CFO, Kenneth Seifert, reported that total investment income for the June quarter was approximately $81.3 million, up $2.6 million or 3.2% compared to the prior quarter. Prepayment income was approximately $1.2 million, up from $0.6 million last quarter.

MFIC's Board declared a quarterly dividend of $0.38 per share for shareholders of record as of September 9, 2025, payable on September 25, 2025. Powell noted that the company intends to redeploy the capital repaid from Merx, which should be accretive to MFIC's earnings power and strengthen its dividend coverage going forward.

Management expects the further reduction of Merx exposure and redeployment of proceeds to "enhance long-term value for our shareholders." There was no explicit update to annual guidance or new quantitative targets for the remainder of 2025 provided in the prepared remarks.

Financial Results
- Net investment income per share: $0.39
- GAAP net income per share: $0.19
- NAV per share at quarter-end: $14.75
- Total investment income for the quarter: $81.3 million
- Net expenses for the quarter: $44.9 million

References:
[1] https://seekingalpha.com/news/4484062-midcap-financial-outlines-90m-merx-capital-redeployment-signals-higher-nii-potential-amid