Monroe Capital Corporation Announces Q2 2025 Results and Merger with Horizon Technology Finance Corporation

Monroe Capital Corporation reported Q2 2025 results showing a 21% decline in Net Investment Income (NII) to $3.3 million, or $0.15 per share. Portfolio investments dropped to $367.7 million, and non-accrual investments rose to 3.6% of the portfolio. The company maintained its quarterly dividend at $0.25 per share. Monroe Capital Corporation has entered a merger agreement with Horizon Technology Finance Corporation, set to occur in a NAV-for-NAV structure.

Monroe Capital Corporation (MRCC) reported its Q2 2025 financial results, showing a 21% decline in Net Investment Income (NII) to $3.3 million, or $0.15 per share. The company's portfolio investments dropped to $367.7 million, while non-accrual investments rose to 3.6% of the portfolio. Monroe Capital maintained its quarterly dividend at $0.25 per share. The company also announced a merger agreement with Horizon Technology Finance Corporation (HRZN), set to occur in a NAV-for-NAV structure [1][2].

The decline in NII was driven by a decrease in net investment income due to lower average invested assets and effective rates. The net asset value (NAV) fell to $179.6 million, or $8.29 per share, primarily due to net unrealized losses and dividends exceeding net investment income. Debt-to-equity leverage decreased as proceeds from sales and paydowns reduced the revolving credit facility balance [1].

Analysts remain bullish on MRCC, with the average rating being "buy" and a breakdown of recommendations including 1 "strong buy" or "buy," 3 "hold," and no "sell" or "strong sell." The median 12-month price target for MRCC is $8.25, about 17% above its August 8 closing price of $6.85. The stock recently traded at 9 times the next 12-month earnings compared to a P/E of 7 three months ago [1].

The merger agreement between MRCC and HRZN is expected to unlock shareholder value by providing operational synergies and cost savings. HRZN will benefit from additional equity capital of approximately $165 million before adding allowable leverage, corresponding to a NAV of approximately $446 million. The combined company expects to realize a reduction in per-share operating expenses and improved trading liquidity. The merger is structured as a tax-free reorganization under Section 368(a), allowing MRCC shareholders to exchange their shares without incurring immediate tax consequences [2].

The merger is expected to close in the fourth quarter of 2025, subject to customary regulatory approvals, shareholder approvals, and other closing conditions. Upon closing, former MRCC shareholders are expected to own approximately 37% of HRZN. The merger agreement includes an advisory fee waiver of up to $4 million over the first four full fiscal quarters following the closing [2].

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_PLXD5548D:0-monroe-capital-q2-net-investment-income-falls-to-3-3-mln/
[2] https://ir.horizontechfinance.com/news-releases/news-release-details/monroe-capital-corporation-and-horizon-technology-finance