MidCap Financial Investment Corp

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 June 30, 2025, non-qualifying assets represented approximately 9.3% 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 September 30, 2025, non-qualifying assets represented approximately 9.6% of the total assets of the Company.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Since the initial public offering of the Company in April 2004 and through September 30, 2025, invested capital totaled $26.6 billion in 837 portfolio companies. Over the same period, the Company completed transactions with more than 100 different financial sponsors.

Previous wording

On June 11, 2025, the Board appointed Kenneth Seifert as Chief Financial Officer and Treasurer of the Company, effective as of the close of business on June 30, 2025. Mr. Seifert (i) was not appointed as the Company’s Chief Financial Officer and Treasurer pursuant to any arrangement or understanding with any other person; (ii) does not have a family relationship with any of the Company’s directors or other executive officers; (iii) has not engaged, since the beginning of the Company’s last fiscal year, nor proposes to engage, in any transaction in which the Company was or is a participant; and (iv) has not entered into, nor expects to enter into, any material plan, contract, arrangement, grant or award in connection with his appointment as the Company’s Chief Financial Officer and Treasurer.

Current wording

On September 4, 2025, the Board appointed Joseph Durkin as Chief Accounting Officer of the Company, effective as of the close of business on September 4, 2025.

Previous 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.

Current wording

As of September 30, 2025, $3.13 billion or 98.2% 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

Under the Company's valuation policies and procedures, the Investment Adviser values investments, including certain secured debt, unsecured debt, and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker, primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are unavailable or are deemed not to represent fair value, we typically utilize independent third party valuation firms to assist us in determining fair value. Accordingly, such investments go through our multi-step valuation process as described below. In each case, our independent third party valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations for such investments. Investments purchased within the quarter before the valuation date and debt investments with remaining maturities of 60 days or less may each be valued at cost with interest accrued or discount accreted/premium amortized to the date of maturity (although they are typically valued at available market quotations), unless such valuation, in the judgment of our Investment Adviser, does not represent fair value. In this case, such investments shall be valued at fair value as determined in good faith by or under the direction of the Investment Adviser, including using market quotations where available. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Investment Adviser. Such determination of fair values may involve subjective judgments and estimates.

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. Under the Company's valuation policies and procedures, the Investment Adviser values investments, including certain secured debt, unsecured debt, and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker, primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are unavailable or are deemed not to represent fair value, we typically utilize independent third party valuation firms to assist us in determining fair value. Accordingly, such investments go through our multi-step valuation process as described below. In each case, our independent third party valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations for such investments. Investments purchased within the quarter before the valuation date and debt investments with remaining maturities of 60 days or less may each be valued at cost with interest accrued or discount accreted/premium amortized to the date of maturity (although they are typically valued at available market quotations), unless such valuation, in the judgment of our Investment Adviser, does not represent fair value. In this case, such investments shall be valued at fair value as determined in good faith by or under the direction of the Investment Adviser, including using market quotations where available. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Investment Adviser. Such determination of fair values may involve subjective judgments and estimates.

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 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.

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 nine months ended September 30, 2025, there were no significant changes to the Company’s valuation techniques and related inputs considered in the valuation process.

Previous wording

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

Current wording

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

Previous 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.

Current wording

The increase in total investment income for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily driven by increase in interest income (including PIK) of $22.9 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 11.5% for the nine months ended September 30, 2024 to 10.5% for the nine months ended September 30, 2025.

Previous 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.

Current wording

Net expenses increased by $3.3 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily driven by the increase in management and performance-based incentive fees of $2.9 million due to increase in yielding portfolio from Mergers. The increase in interest and other debt expense was attributed to an increase in average debt outstanding, from $1.7 billion for the three months ended September 30, 2024 to $1.9 billion for the three months ended September 30, 2025. This was partially offset by the decrease in the total annualized cost of debt, from 7.4% for the three months ended September 30, 2024 to 6.5% for the three months ended September 30, 2025.

Previous wording

Net expenses increased by $9.9 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily driven by the increase in interest and other debt expenses of $9.1 million. The increase in interest and other debt expenses was attributed to an increase in average debt outstanding, from $1.4 billion for the six months ended June 30, 2024 to $1.9 billion for the six months ended June 30, 2025. This was partially offset by the decrease in the total annualized cost of debt, from 7.6% for the six months ended June 30, 2024 to 6.8% for the six months ended June 30, 2025. Management and performance based incentive fee has increased $2.0 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was due to increase in yielding portfolio due to the Mergers.

Current wording

Net expenses increased by $13.1 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily driven by the increase in interest and other debt expenses of $10 million. The increase in interest and other debt expenses was attributed to an increase in average debt outstanding, from $1.5 billion for the nine months ended September 30, 2024 to $1.9 billion for the nine months ended September 30, 2025. This was partially offset by the decrease in the total annualized cost of debt, from 7.5% for the nine months ended September 30, 2024 to 6.7% for the nine months ended September 30, 2025. Management and performance based incentive fee has increased $4.9 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was due to increase in yielding portfolio due to the Mergers.

Previous 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:

Current wording

During the nine months ended September 30, 2025, we recognized gross realized gains of $7.0 million and gross realized losses of $40.4 million, resulting in net realized losses of $33.3 million. Net realized losses for the nine months ended September 30, 2025 was primarily driven by the restructure of Renovo, Mitel Network and New Era Technology and partial write off of Ambrosia Buyer Corp. The loss was partially offset by the exit of Orgain, Inc., partial exit of Heubach and Truck-Lite Co, LLC. Significant realized gains (losses) for the nine months ended September 30, 2025 are summarized below:

Previous wording

During the six months ended June 30, 2024, we recognized gross realized gains of $0.6 million and gross realized losses of $24.3 million, resulting in net realized losses of $23.7 million. Net realized losses for the six months ended June 30, 2024 was primarily driven by the write off of the Company's investment in MSEA Tankers LLC and ViewRay. Significant realized gains (losses) for the six months ended June 30, 2024 are summarized below:

Current wording

During the nine months ended September 30, 2024, we recognized gross realized gains of $2.0 million and gross realized losses of $25.2 million, resulting in net realized losses of $23.2 million. Net realized losses for the nine months ended September 30, 2024 was primarily driven by the write off of the Company's investment in MSEA Tankers LLC and ViewRay. Significant realized gains (losses) for the nine months ended September 30, 2024 are summarized below:

Previous wording

During the three months ended June 30, 2025, we recognized gross unrealized gains of $30.4 million and gross unrealized losses of $31.4 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains in investments of $1.0 million. Net change in unrealized gains for the three months ended June 30, 2025 was primarily driven by the increased fair market value of Renovo and Mitel Networks following restructures as well as increase in Merx given settlement on Russian insurance claims and certain recoveries. The net change in unrealized gains was offset by the underperformance of New Era, Securus Technologies Holdings, Inc., ChyronHego Corporation, Tasty Chick'n and Amplity. Significant changes in unrealized gains (losses) for the three months ended June 30, 2025 are summarized below:

Current wording

During the three months ended September 30, 2025, we recognized gross unrealized gains of $44.7 million and gross unrealized losses of $33.4 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains in investments of $11.3 million. Net change in unrealized gains for the three months ended September 30, 2025 was primarily driven by the increased fair market value of New Era Technology following restructures, write off of Ambrosia Buyer Corp., as well as increase in Merx given settlement on Russian insurance claims and certain recoveries. The net change in unrealized gains was offset by the underperformance of Lending Point, Kauffman, Allstar Holdings, Naviga, Munson and Simeio. Significant changes in unrealized gains (losses) for the three months ended September 30, 2025 are summarized below:

Previous wording

During the three months ended June 30, 2024, we recognized gross unrealized gains of $23.8 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 $8.7 million. Net change in unrealized gains (losses) for the three months ended June 30, 2024 was primarily driven by the write off of MSEA Tankers LLC and the financial under-performance of US Auto, Renovo and PHS. Significant changes in unrealized gains (losses) for the three months ended June 30, 2024 are summarized below:

Current wording

During the three months ended September 30, 2024, we recognized gross unrealized gains of $11.6 million and gross unrealized losses of $23.5 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $11.9 million. Net change in unrealized gains (losses) for the three months ended September 30, 2024 was primarily driven by the write off of MSEA Tankers LLC and the financial under-performance of US Auto, Renovo and PHS. Significant changes in unrealized gains (losses) for the three months ended September 30, 2024 are summarized below:

Previous wording

During the six months ended June 30, 2025, we recognized gross unrealized gains of $35.2 million and gross unrealized losses of $43.2 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses of $8 million. Net change in unrealized gains for the six months ended June 30, 2025 was primarily driven by the increased fair market value of Renovo and Mitel Networks following restructures as well as increase in Merx given settlement on Russian insurance claims and certain recoveries. The net change in unrealized gains was offset by the underperformance of New Era, Securus Technologies Holdings, Inc., ChyronHego Corporation, Tasty Chick'n and Amplity. Significant changes in unrealized gains (losses) for the six months ended June 30, 2025 are summarized below:

Current wording

During the nine months ended September 30, 2025, we recognized gross unrealized gains of $66.8 million and gross unrealized losses of $63.6 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses of $3.2 million. Net change in unrealized gains for the nine months ended September 30, 2025 was primarily driven by the increased fair market value of Renovo and Mitel Networks following restructures, the write off of Ambrosia Buyer Corp., as well as the increase in Merx given settlement on Russian insurance claims and certain recoveries. The net change in unrealized gains was offset by the underperformance of a handful of portfolio companies including Lending Point, Kauffman, ChyronHego Corporation, Securus Technologies Holdings Inc., Tasty Chick'n. Significant changes in unrealized gains (losses) for the nine months ended September 30, 2025 are summarized below:

Previous 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:

Current wording

During the nine months ended September 30, 2024, we recognized gross unrealized gains of $48.6 million and gross unrealized losses of $46.8 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized gains of $1.8 million. Net change in unrealized gains for the nine months ended September 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 nine months ended September 30, 2024 are summarized below:

Previous 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.

Current wording

As of September 30, 2025, aggregate lender commitments under the Senior Secured Facility totaled $1.66 billion and $575.1 million of unused capacity. As of September 30, 2025, the Company had $— 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 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.

Current wording

Distributions paid to stockholders during the three and nine months ended September 30, 2025 totaled $35.5 million ($0.38 per share) and $106.5 million ($1.14 per share), respectively. Distributions paid to stockholders during the three and nine months ended September 30, 2024 totaled $54.4 million ($0.58 per share) and $104 million ($1.34 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 September 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 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.

Current wording

For the three and nine months ended September 30, 2025, PIK income totaled $4.2 million and $12.9 million on total investment income of $82.6 million and $242.5 million, respectively. For the three and nine months ended September 30, 2024, PIK income totaled $3.0 million and $7.5 million on total investment income of $82.1 million and $219.6 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.