WhiteHorse Finance, Inc. Reports Q4 and Full Year 2025 Results, Declares Dividend and Portfolio Developments

Key Highlights and Shareholder-Focused Insights

• Q4 and FY2025 Earnings Announced: WhiteHorse Finance, Inc. (“WhiteHorse” or the “Company”, Nasdaq: WHF) reported its fourth quarter and full-year financial results for the period ended December 31, 2025.
• Dividend Declaration: The Board declared a regular quarterly distribution of \$0.25 per share and a supplemental distribution of \$0.01 per share, both payable on April 6, 2026 to shareholders of record as of March 12, 2026. The annual total distribution for 2025 was \$1.44 per share, including a special distribution of \$0.035 per share.
• Net Asset Value (NAV) Decline: NAV at December 31, 2025 was \$259.8 million, or \$11.68 per share, down from \$12.31 per share at year-end 2024, but slightly higher than \$11.41 reported at September 30, 2025. This trend may be closely watched by investors as it can impact valuation and market pricing.
• Investment Portfolio & Deployment:
  • Total investment portfolio at fair value: \$578.6 million (down from \$642.2 million at end-2024).
  • STRS JV investment portfolio: \$323.6 million.
  • Q4 gross investment deployments: \$77.1 million, with \$64.0 million in new originations and \$13.1 million in add-ons.
  • FY2025 gross deployments: \$180.8 million (\$152.1 million in new originations, \$28.7 million in add-ons).
  • Sales and repayments for the year: \$155.7 million.
  • Weighted average effective yield on income-producing debt investments: 9.1% at December 31, 2025.
  • Portfolio composition: 74.3% first lien secured loans, 0.8% second lien, 0.2% unsecured loans, 6.4% equity, 18.3% STRS JV investments.
• Net Investment Income (NII) and Core NII:
  • Q4 NII and core NII: \$6.6 million (\$0.287 per share), down 17.5% year-over-year.
  • FY2025 NII and core NII: \$26.1 million (\$1.127 per share), down 29.8% from the prior year.
  • Decline attributed to lower yields, non-accrual investments, and a smaller portfolio size.
• Share Repurchases & Insider Buying:
  • During Q4, the Company and H.I.G. directors, officers, and employees purchased around 1.1 million shares for ~\$8.0 million, indicating insider confidence.
  • Board approved a \$7.5 million increase in the share repurchase program, bringing the total authorized to \$22.5 million.
• Liquidity Position:
  • Cash and equivalents: \$29.7 million as of December 31, 2025 (down from \$45.9 million at September 30, 2025).
  • Undrawn credit facility capacity: \$100.0 million, with \$43.8 million available for drawing (subject to borrowing base limitations).
• Credit Quality & Portfolio Management:
  • Portfolio remains heavily tilted toward first lien loans with a focus on credit quality and structure.
  • Dedicated restructuring resources in place for underperforming credits; continued selective origination in a competitive environment.
• Realized and Unrealized Gains/Losses:
  • FY2025 net realized and unrealized loss: \$11.8 million, a significant reduction from \$26.4 million loss in FY2024, mainly due to markdowns in specific portfolio companies and general portfolio markdowns.
  • Q4 2025 saw a net realized and unrealized gain of \$1.8 million, compared to a \$4.1 million loss in Q4 2024.
• Earnings Call Details: The company will host an earnings call on March 2, 2026, at 1:30 p.m. ET. Replays and webcasts will be available for investors.
• Tax Considerations: Distributions may include return of capital and/or capital gains. Final tax characteristics will be reported on Form 1099-DIV.

Detailed Financial Performance

• Income Statement Overview:
  • Total investment income for FY2025: \$72.7 million (down from \$92.8 million in 2024).
  • Total expenses: \$45.9 million (versus \$54.5 million in 2024), reflecting lower fees and management costs.
  • Net increase in net assets from operations: \$14.3 million (up from \$10.9 million in 2024).
  • Annual basic and diluted earnings per share: \$0.62 (up from \$0.47 in 2024 but down from \$0.88 in 2023).
• Balance Sheet Highlights:
  • Total assets: \$615.1 million at year-end 2025 (down from \$676.8 million).
  • Total liabilities: \$355.3 million (down from \$390.7 million).
  • Outstanding shares: 22,234,045 (down from 23,243,088 in 2024, reflecting buybacks).
  • Net asset value per share: \$11.68 (down from \$12.31).
• Investment Portfolio Details:
  • The portfolio consists of 129 positions across 68 companies, with an average debt investment size of \$3.7 million.
  • Variable rate loans dominate the portfolio, mostly indexed to SOFR, with rate floors in place.
  • Significant investments include first lien secured loans across diverse industries, with top sectors including application software, construction materials, distributors, household appliances, and specialized finance.
  • Equity investments totaled \$58.5 million at fair value (22.5% of net assets).
  • Money market funds totaled \$21.0 million (8.1% of net assets).
• Restructuring and Credit Events:
  • During 2025, several portfolio restructurings occurred, including conversions of debt to equity for companies like PlayMonster Group LLC, Honors Holdings (now Camarillo Fitness Holdings), Media Source, and Alvaria.
  • As of year-end, certain investments are on non-accrual status, impacting interest income.

Shareholder Considerations and Potential Price-Sensitive Information

• Dividend Sustainability and Buybacks: The prudent reset of the base dividend and framework for supplemental distributions aim to align payouts with earnings capacity. The substantial share repurchases, especially by insiders, and the increased authorization for buybacks reflect management’s confidence in the Company’s intrinsic value and may be supportive for the share price.
• Net Asset Value Trend: The decline in NAV per share over the year is a potential concern for investors, but the sequential increase in Q4 and the insider buying could be interpreted as positive signals for future performance.
• Portfolio Management and Credit Quality: The Company’s focus on first lien loans, active management of underperforming credits, and selectivity in originations are intended to protect shareholder value, especially in a competitive and potentially volatile credit environment.
• Lack of Material Excise/Tax Adjustments: Core NII matches NII, implying limited distortions from one-time items or tax adjustments, providing a clearer view of underlying earnings power.
• Liquidity and Leverage: The Company retains meaningful liquidity for future investments or buybacks, with a moderate leverage profile.
• Restructurings: The number of portfolio company restructurings and investments on non-accrual may be a risk factor to monitor, as further markdowns or recoveries could impact future results.

Conclusion

WhiteHorse Finance’s 2025 performance reflected a challenging year in the credit markets, with lower investment income and asset values, but also demonstrated resilience and proactive management. Key developments, such as insider buying, a robust buyback program, a reset dividend strategy, and ongoing portfolio optimization, are all factors likely to influence investor sentiment and the Company’s market valuation. Shareholders should closely monitor future earnings, NAV trends, and any further credit events or restructurings, as these will drive the Company’s ability to sustain and grow distributions and support share price performance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should refer to the full financial report and consult with their advisors before making investment decisions. Forward-looking statements are subject to risks and uncertainties and actual results may differ. WhiteHorse Finance, Inc.’s official filings with the SEC and investor disclosures should be reviewed for further details.

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