MidCap Financial Investment Corp

Previous wording

MidCap Financial Investment Corporation (the “Company,” “MFIC,” “we,” “us,” or “our”) was incorporated under the Maryland General Corporation Law in February 2004. We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). As such, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private or thinly traded public U.S. companies, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, for federal income tax purposes we have elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Pursuant to this election and assuming we qualify as a RIC, we generally do not have to pay corporate-level federal income taxes on any income we distribute to our stockholders. We commenced operations on April 8, 2004 upon completion of our initial public offering that raised $870 million in net proceeds from selling 62 million shares of common stock at a price of $15.00 per share (20.7 million shares at a price of $45.00 per share adjusted for the one-for-three reverse stock split). Since then, and through March 31, 2025, we have raised approximately $2.68 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for $254.2 million.

Current wording

MidCap Financial Investment Corporation (the “Company,” “we,” “us,” or “our”) was incorporated under the Maryland General Corporation Law in February 2004. We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). As such, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private or thinly traded public U.S. companies, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, for federal income tax purposes we have elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Pursuant to this election and assuming we qualify as a RIC, we generally do not have to pay corporate-level federal income taxes on any income we distribute to our stockholders. We commenced operations on April 8, 2004 upon completion of our initial public offering that raised $870 million in net proceeds from selling 62 million shares of common stock at a price of $15.00 per share (20.7 million shares at a price of $45.00 per share adjusted for the one-for-three reverse stock split). Since then, and through June 30, 2025, we have raised approximately $2.68 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for $254.2 million.

Previous wording

Apollo Investment Management, L.P. (the “Investment Adviser” or “AIM”) is our investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (“AGM”). The Investment Adviser, subject to the overall supervision of our Board of Directors (the “Board”), manages the day-to-day operations of, and provides investment advisory services to the Company. AGM and other affiliates manage other funds that may have investment mandates that are similar, in whole or in part, with ours. AIM and its affiliates may determine that an investment is appropriate both for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, AIM may determine that we should invest on a side-by-side basis with one or more other funds. We make all such investments subject to compliance with applicable regulations and interpretations, and our allocation procedures. Certain types of negotiated co-investments may be made only in accordance with the terms of the exemptive order (the “Order”) we received from the SEC permitting us to do so. Under the terms of the Order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our Board’s approved criteria. In certain situations where co-investment with one or more funds managed by AIM or its affiliates is not covered by the Order, the personnel of AIM or its affiliates will need to decide which fund will proceed with the investment. Such personnel will make these determinations based on allocation policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. The Order is subject to certain terms and conditions so there can be no assurance that we will be permitted to co-invest with certain of our affiliates other than in the circumstances currently permitted by regulatory guidance and the Order.

Current wording

Apollo Investment Management, L.P. (the “Investment Adviser” or “AIM”) is our investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (“AGM”). The Investment Adviser, subject to the overall supervision of our Board of Directors (the “Board”), manages the day-to-day operations of, and provides investment advisory services to the Company. AGM and other affiliates manage other funds that may have investment mandates that are similar, in whole or in part, with ours. AIM and its affiliates may determine that an investment is appropriate both for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, AIM may determine that we should invest on a side-by-side basis with one or more other funds. We make all such investments subject to compliance with applicable regulations and interpretations, and our allocation procedures. The Company, the Investment Adviser and certain affiliates received an exemptive order from the SEC on May 14, 2025 (the “Order”), that permits us, among other things, to co-invest with other funds and accounts managed by the Investment Adviser or its affiliates, subject to certain conditions. Certain types of negotiated co-investments may be made only in accordance with the terms of the Order. Pursuant to such Order, the Board has approved co-investment policies and procedures describing how the Company will comply with the Order. Further, the Investment Adviser has adopted policies and procedures (the “Adviser Allocation Policy”) describing the allocation of investment opportunities in which we will have the opportunity to participate with one or more Apollo-managed BDCs, including us (the “Apollo BDCs”), certain Apollo-managed registered investment companies (the “Apollo RICs” and, together with the Apollo BDCs, the “Apollo Regulated Funds”) and other public or private Apollo funds that target similar assets. Pursuant to the Adviser Allocation Policy, the Company will be given the opportunity to participate in any investments that fall within certain criteria established by the Investment Adviser. The Company may determine to participate or not to participate, depending on whether the Investment Adviser determines that the investment is appropriate for the Company (e.g., based on investment strategy). The investment would generally be allocated to us, any other Apollo Regulated Funds and the other Apollo funds that target similar assets pro rata based on available capital in the applicable asset class. If the Investment Adviser determines that such investment is not appropriate for us, the investment will not be allocated to us.

Previous wording

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, the competitive environment for the types of investments we make. As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). As of March 31, 2025, non-qualifying assets represented approximately 8.5% of the total assets of the Company.

Current wording

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, the competitive environment for the types of investments we make. As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). As of June 30, 2025, non-qualifying assets represented approximately 9.3% of the total assets of the Company.

Previous wording

Our portfolio and investment activity during the three months ended March 31, 2025 and 2024, was as follows:

Current wording

Our portfolio and investment activity during the three and six months ended June 30, 2025 and 2024, was as follows:

Previous wording

Since the initial public offering of the Company in April 2004 and through March 31, 2025, invested capital totaled $25.9 billion in 814 portfolio companies. Over the same period, the Company completed transactions with more than 100 different financial sponsors.

Current wording

Since the initial public offering of the Company in April 2004 and through June 30, 2025, invested capital totaled $26.2 billion in 828 portfolio companies. Over the same period, the Company completed transactions with more than 100 different financial sponsors.

Previous wording

As of March 31, 2025, $3.11 billion or 97.5% of the Company’s investments were classified as Level 3. The high proportion of Level 3 investments relative to our total investments is directly related to our investment philosophy and target portfolio, which consists primarily of long-term secured debt, as well as unsecured and mezzanine positions of private middle-market companies. A fundamental difference exists between our investments and those of comparable publicly traded fixed income investments, namely high-yield bonds, and this difference affects the valuation of our private investments relative to comparable publicly traded instruments.

Current wording

As of June 30, 2025, $3.25 billion or 97.7% of the Company’s investments were classified as Level 3. The high proportion of Level 3 investments relative to our total investments is directly related to our investment philosophy and target portfolio, which consists primarily of long-term secured debt, as well as unsecured and mezzanine positions of private middle-market companies. A fundamental difference exists between our investments and those of comparable publicly traded fixed income investments, namely high-yield bonds, and this difference affects the valuation of our private investments relative to comparable publicly traded instruments.

Previous wording

Pursuant to Rule 2a-5 under the 1940 Act, the Company’s Board has designated the Investment Adviser as its “valuation designee” to perform the fair value determinations for all investments held by the Company. The Company's Board continues to be responsible for overseeing the processes for determining fair valuation.

Current wording

Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated the Investment Adviser as its “valuation designee” to perform the fair value determinations for all investments held by the Company. The Board continues to be responsible for overseeing the processes for determining fair valuation.

Previous wording

The Investment Adviser discusses valuations and determines in good faith the fair value of each investment in our portfolio based on the input of the applicable independent valuation firm.

Current wording

The Investment Adviser discusses valuations and determines in good faith the fair value of each investment in our portfolio based on the input of the applicable independent valuation firm; and

Previous wording

Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, seniority of investment in the investee company’s capital structure, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When readily available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. During the three months ended March 31, 2025, there were no significant changes to the Company’s valuation techniques and related inputs considered in the valuation process.

Current wording

Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, seniority of investment in the investee company’s capital structure, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When readily available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. During the six months ended June 30, 2025, there were no significant changes to the Company’s valuation techniques and related inputs considered in the valuation process.

Previous wording

Because there is not a readily available market value for most of the investments in our portfolio, substantially all of our portfolio investments are valued at fair value as determined in good faith by our investment adviser, as the valuation designee, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had an active market existed for such investments and may differ materially from the values that we may ultimately realize.

Current wording

Because there is not a readily available market value for most of the investments in our portfolio, substantially all of our portfolio investments are valued at fair value as determined in good faith by the Investment Adviser, as the valuation designee, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had an active market existed for such investments and may differ materially from the values that we may ultimately realize.

Previous wording

Operating results for the three months ended March 31, 2025 and 2024 were as follows:

Current wording

Operating results for the three and six months ended June 30, 2025 and 2024 were as follows:

Previous wording

The increase in total investment income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily driven by increase in interest income (including PIK) of $11.5 million. The increase in total interest income was due to a higher income-bearing investment portfolio, primarily related to the assets acquired in the Mergers. This was partially offset by a decrease in the average yield for the total debt portfolio, from 12.0% for the three months ended March 31, 2024 to 10.7% for the three months ended March 31, 2025.

Current wording

The increase in total investment income for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was primarily driven by increase in interest income (including PIK) of $12.0 million. The increase in total interest income was due to a higher income-bearing investment portfolio, primarily related to the assets acquired in the Mergers. This was partially offset by a decrease in the average yield for the total debt portfolio, from 12.0% for the three months ended June 30, 2024 to 10.5% for the three months ended June 30, 2025.

Previous wording

Net expenses increased by $4.6 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by the increase in interest and other debt expenses of $4.3 million. The increase in interest and other debt expenses was attributed to an increase in average debt outstanding, from $1.4 billion for the three months ended March 31, 2024 to $1.8 billion for the three months ended March 31, 2025. This was partially offset by the decrease in the total annualized cost of debt, from 7.65% for the three months ended March 31, 2024 to 6.83% for the three months ended March 31, 2025. Management and performance based incentive fee has increased $2.1 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was due to increase in yielding portfolio due to the Mergers.

Current wording

Net expenses increased by $5.3 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by the increase in interest and other debt expenses of $5.5 million. The increase in interest and other debt expenses was attributed to an increase in average debt outstanding, from $1.4 billion for the three months ended June 30, 2024 to $1.9 billion for the three months ended June 30, 2025. This was partially offset by the decrease in the total annualized cost of debt, from 7.5% for the three months ended June 30, 2024 to 6.8% for the three months ended June 30, 2025. Management fee has increased $1.7 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was due to increase in yielding portfolio due to the Mergers. The management fee increase was offset by decrease in performance based incentive fee due to loss on the portfolio.

Previous wording

During the three months ended March 31, 2024, we recognized gross realized gains of $0.6 million and gross realized losses of $8.7 million, resulting in net realized losses of $8.1 million. Net realized losses for the three months ended March 31, 2024 was primarily driven by the write off of the Company's investment in ViewRay. Significant realized gains (losses) for the three months ended March 31, 2024 are summarized below:

Current wording

During the three months ended June 30, 2024, we recognized gross realized gains of $0.1 million and gross realized losses of $15.7 million, resulting in net realized losses of $15.6 million. Net realized losses for the three months ended June 30, 2024 was primarily driven by the write off of the Company's investment in MSEA Tankers LLC. Significant realized gains (losses) for the three months ended June 30, 2024 are summarized below:

Previous wording

During the three months ended March 31, 2025, we recognized gross realized gains of $4.5 million and gross realized losses of $1.4 million, resulting in net realized gains of $3.1 million. Net realized gains for the three months ended March 31, 2025 were primarily due to the exit of Orgain, Inc. and the partial exit of Heubach. Significant realized gains (losses) for the three months ended March 31, 2025 are summarized below:

Current wording

During the six months ended June 30, 2025, we recognized gross realized gains of $4.6 million and gross realized losses of $18.1 million, resulting in net realized losses of $13.5 million. Net realized losses for the six months ended June 30, 2025 was primarily driven by the restructure of Renovo and Mitel Network and partial write off of Ambrosia Buyer Corp, offset by the exit of Orgain, Inc. and partial exit of Heubach. Significant realized gains (losses) for the six months ended June 30, 2025 are summarized below:

Previous wording

During the three months ended March 31, 2024, we recognized gross unrealized gains of $20.1 million and gross unrealized losses of $15.1 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $5.0 million. Net change in unrealized gains (losses) for the three months ended March 31, 2024 was primarily driven by the increase in cashflows and new lease extentions from Merx Aviation Finance, LLC, and underperformance of US Auto, International Cruise & Excursion Gallery, Naviga and ChyronHego. Significant changes in unrealized gains (losses) for the three months ended March 31, 2024 are summarized below:

Current wording

During the six months ended June 30, 2024, we recognized gross unrealized gains of $42.2 million and gross unrealized losses of $28.5 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $13.7 million. Net change in unrealized gains for the six months ended June 30, 2024 was primarily driven by write off of MSEA Tankers LLC and ViewRay, the increase in cashflows and new lease extensions from Merx Aviation Finance, partially offset by the underperformance of US Auto, International Cruise & Excursion Gallery and Naviga. Significant changes in unrealized gains (losses) for the six months ended June 30, 2024 are summarized below:

Previous wording

As of March 31, 2025, aggregate lender commitments under the Senior Secured Facility totaled $1.66 billion and $547.8 million of unused capacity. As of March 31, 2025, there were $6.2 million of letters of credit issued under the Senior Secured Facility as shown as part of total commitments in Note 8 to the consolidated financial statements.

Current wording

As of June 30, 2025, aggregate lender commitments under the Senior Secured Facility totaled $1.66 billion and $433.6 million of unused capacity. As of June 30, 2025, there were $4.4 million of letters of credit issued under the Senior Secured Facility as shown as part of total commitments in Note 8 to the consolidated financial statements.

Previous wording

Distributions paid to stockholders during the three months ended March 31, 2025 totaled $35.6 million ($0.38 per share). Distributions paid to stockholders during the three months ended March 31, 2024 totaled $24.8 million ($0.38 per share). For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. Although the tax character of distributions paid to stockholders through March 31, 2025 may include return of capital, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until we file our tax return for the tax year ended December 31, 2025. Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the calendar year. Our quarterly distributions, if any, will be determined by our Board.

Current wording

Distributions paid to stockholders during the three and six months ended June 30, 2025 totaled $35.5 million ($0.38 per share) and $71.1 million ($0.76 per share), respectively. Distributions paid to stockholders during the three and six months ended June 30, 2024 totaled $24.8 million ($0.38 per share) and $49.6 million ($0.76 per share), respectively. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. Although the tax character of distributions paid to stockholders through June 30, 2025 may include return of capital, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until we file our tax return for the tax year ended December 31, 2025. Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the calendar year. Our quarterly distributions, if any, will be determined by our Board.

Previous wording

For the three months ended March 31, 2025, PIK income totaled $3.5 million on total investment income of $78.7 million. For the three months ended March 31, 2024, PIK income totaled $2.0 million on total investment income of $68.3 million. In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders annually in the form of distributions, even though the Company has not yet collected the cash. See Note 5 to the consolidated financial statements for more information on the Company’s PIK income.

Current wording

For the three and six months ended June 30, 2025, PIK income totaled $5.2 million and $9.9 million on total investment income of $81.2 million and $159.9 million, respectively. For the three and six months ended June 30, 2024, PIK income totaled $2.5 million and $4.5 million on total investment income of $69.2 million and $137.5 million, respectively. In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders annually in the form of distributions, even though the Company has not yet collected the cash. See Note 5 to the consolidated financial statements for more information on the Company’s PIK income.