MidCap Financial Investment Corp

Previous 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 March 31, 2026, we have raised approximately $2.68 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for $343.1 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, 2026, we have raised approximately $2.68 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for $375.0 million.

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, 2026, non-qualifying assets represented approximately 8.3% 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, and 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, 2026, non-qualifying assets represented approximately 7.7% of the total assets of the Company.

Previous wording

Our portfolio and investment activity during the three months ended March 31, 2026 and 2025, was as follows:

Current wording

Our portfolio and investment activity during the three and six months ended June 30, 2026 and 2025, was as follows:

Previous wording

As of March 31, 2026, $2.93 billion or 98.6% 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, 2026, $2.73 billion or 98.6% 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

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, 2026, 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, 2026, 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 months ended March 31, 2026 and 2025 were as follows:

Current wording

Operating results for the three and six months ended June 30, 2026 and 2025 were as follows:

Previous wording

The decrease in total investment income for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily driven by a decrease in recurring interest income of $7.0 million. The decrease in recurring interest income was due to a decrease in the average yield for the total debt portfolio, from 10.7% for the three months ended March 31, 2025 to 9.6% for the three months ended March 31, 2026 combined with a decrease in the overall income-bearing investment portfolio.

Current wording

The decrease in total investment income for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily driven by a decrease in interest income (including PIK) of $13.5 million. The decrease in interest income was due to a decrease in the average yield for the total debt portfolio, from 10.5% for the three months ended June 30, 2025 to 9.5% for the three months ended June 30, 2026 combined with a decrease in the overall income-bearing investment portfolio.

Previous wording

Net expenses decreased by $6.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, due to the fact that incentive fees were not accrued in the current quarter, as the Company did not meet its total return threshold. Interest and other debt expenses also decreased, driven by lower base rates and a lower average debt outstanding during the period. This was partially offset by an increase in administrative service and other G&A expenses.

Current wording

Net expenses decreased by $9.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, due to the fact that incentive fees were not accrued in the current quarter, as the Company did not meet its total return threshold. Interest and other debt expenses also decreased, driven by lower base rates and a lower average debt outstanding during the period. This was partially offset by an increase in administrative service and other G&A expenses.

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 was 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 three months ended June 30, 2025, we recognized gross realized gains of $0.1 million and gross realized losses of $17.1 million, resulting in net realized losses of $17.0 million. Net realized gains for the three months ended June 30, 2025 was primarily due to the restructure of Renovo and Mitel Networks and partial write off of Ambrosia Buyer Corp. Significant realized gains (losses) for the three months ended June 30, 2025 are summarized below:

Previous wording

Net realized losses on investments for the three months ended March 31, 2026 totaled $10.0 million and was primarily driven by the write off of Renovo and the sale of Carestream. Net realized gains on investments for the three months ended March 31, 2026 totaled $0.7 million, resulting in a net realized loss of $9.4 million.

Current wording

Gross realized losses on investments for the six months ended June 30, 2026 totaled $10.8 million and was primarily driven by the write off of Renovo and the sale of Carestream. Gross realized gains on investments for the six months ended June 30, 2026 totaled $1.0 million, resulting in net realized losses on investments of $9.8 million.

Previous wording

The Company also had a realized gain of $0.9 million on the settlement of foreign currency forward contracts during the period. This was offset by a $3.9 million realized loss on foreign currencies driven by the principal repayment of the CAD, EUR, and GBP contracts on the Senior Secured Facility.

Current wording

The Company also had a realized gain of $1.2 million on the settlement of foreign currency forward contracts during the period. This was offset by a $4.3 million realized loss on foreign currencies driven by the principal repayment of the CAD, EUR, and GBP contracts on the Senior Secured Facility.

Previous wording

During the three months ended March 31, 2025, we recognized gross unrealized gains of $12.5 million and gross unrealized losses of $19.5 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses in investments of $7.0 million. Net change in unrealized gains (losses) for the three months ended March 31, 2025 was primarily driven by the the underperformance of Renovo, AVAD, LLC and Modern Campus, the recent restructure in Mitel Networks and the sale of Orgain, Inc. The change in unrealized losses were partially offset by an increase in Merx equity, expected sale proceedings of The Club Company, performance improvement in Congruex and recent equity infusion in the Sequential Brands Inc. Significant changes in unrealized gains (losses) for the three months ended March 31, 2025 are summarized below:

Current 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 losses in investments of $1.0 million. Net change in unrealized gains (losses) 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:

Previous wording

During the three months ended March 31, 2026, we recognized gross unrealized gains of $16.1 million and gross unrealized losses of $64.8 million, resulting in a net unrealized loss of $48.7 million.

Current wording

During the six months ended June 30, 2026, we recognized gross unrealized gains of $21.2 million and gross unrealized losses of $119.7 million, resulting in a net unrealized loss of $98.5 million.

Previous wording

Net unrealized losses on investments for the three months ended March 31, 2026, totaled $64.8 million and was primarily driven by market-wide spread widening, concentrated in software and technology as well as credit stress in a handful of positions. Net unrealized gains on investments for the three months ended March 31, 2026 totaled $12.0 million and was driven by the unrealized to realized flip of Renovo and Carestream.

Current wording

Net unrealized losses on investments for the six months ended June 30, 2026 totaled $102.5 million and was primarily driven by market-wide spread widening, concentrated in software and technology during the first half of the year, coupled with credit related weakness concentrated in a limited number of positions.

Previous wording

The Company also had a unrealized gain of $0.8 million on open foreign currency forward contracts and a $3.3 million unrealized gain on foreign currencies driven by the principal repayment of the CAD, EUR, and GBP contracts on the Senior Security Facility.

Current wording

The Company also had a unrealized gain of $0.7 million on open foreign currency forward contracts and a $3.3 million unrealized gain on foreign currencies.

Previous wording

We believe that our current cash and cash equivalents on hand, our short-term investments, proceeds from the sale of our 2026 Notes and 2028 Notes, Bethesda CLO 1, and Bethesda CLO 2, together with our available borrowing capacity under our Senior Secured Facility and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months.

Current wording

We believe that our current cash and cash equivalents on hand, our short-term investments, proceeds from the sale of our 2026 Notes, 2028 Notes, Bethesda CLO 1, and Bethesda CLO 2, together with our available borrowing capacity under our Senior Secured Facility and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months.

Previous wording

As of March 31, 2026, aggregate lender commitments under the Senior Secured Facility totaled $1.61 billion and $0.79 million of unused capacity. As of March 31, 2026, 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.

Current wording

As of June 30, 2026, aggregate lender commitments under the Senior Secured Facility totaled $1.61 billion and $0.93 billion of unused capacity. As of June 30, 2026, 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

We may from time to time issue and sell shares of our common stock through public or at-the-market ("ATM”) offerings. On August 13, 2024, we entered into (i) an equity distribution agreement by and among us, the Investment Adviser, the Administrator and Truist Securities, Inc. (“Truist”) and (ii) an equity distribution agreement by and among us, the Investment Adviser, the Administrator and Jefferies LLC (“Jefferies,” and together with Truist, the “Sales Agents”). The equity distribution agreements with Sales Agents described in the preceding sentence are collectively referred to herein as the “Equity Distribution Agreements.” For further details regarding the Equity Distribution Agreements, see Note 7 "Stockholders’ Equity—Equity Issuances — At-the-market (“ATM”) Offering” to our consolidated financial statements included in this report.

Current wording

On August 13, 2024, we entered into (i) an equity distribution agreement by and among us, the Investment Adviser, the Administrator and Truist Securities, Inc. (“Truist”) and (ii) an equity distribution agreement by and among us, the Investment Adviser, the Administrator and Jefferies LLC (“Jefferies,” and together with Truist, the “Sales Agents”). The equity distribution agreements with Sales Agents described in the preceding sentence are collectively referred to herein as the “Equity Distribution Agreements.” For further details regarding the Equity Distribution Agreements, see Note 7"Stockholders’ Equity—Equity Issuances — At-the market (“ATM”) Offering” to our consolidated financial statements included in this report. The ATM program effectively expired on April 12, 2026.

Previous wording

Distributions paid to stockholders during the three months ended March 31, 2026 totaled $28.1 million ($0.31 per share). Distributions paid to stockholders during the three months ended March 31, 2025 totaled $35.6 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, 2026 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, 2026. 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, 2026 totaled $25.5 million ($0.31 per share) and $53.6 million ($0.62 per share), respectively. 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. 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, 2026 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, 2026. 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, 2026, PIK income totaled $3.4 million on total investment income of $71.8. For the three months ended March 31, 2025, PIK income totaled $3.5 million on total investment income of $78.7 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, 2026, PIK income totaled $4.2 million and $8.1 million on total investment income of $68.2 million and $140.1 million, respectively. 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. 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.