Gladstone Investment Corporation reported its second‑quarter 2026 earnings, posting revenue of $25.3 million—$0.5 million above the $24.8 million consensus estimate—and an adjusted earnings per share of $0.24, exactly in line with the $0.24 forecast from analysts. The revenue gain was driven by a $1.0 million increase in interest income from the company’s expanding debt portfolio, offsetting a modest decline in equity‑investment income that was partially eroded by a $29.9 million realized loss on the restructuring of J.R. Hobbs.
Total investment income rose to $25.3 million from $23.5 million in the prior quarter, a $1.8 million increase largely attributable to the $1.0 million uptick in interest income and a $54.4 million unrealized appreciation in the equity portion of the portfolio. The company’s net investment income, however, fell from $9.1 million in Q1 2026 to $4.3 million in Q2 2026, reflecting a shift in the mix of income sources and a lower weighted‑average yield on debt investments that slipped from 13.1% to 13.2% after adjusting for past‑due interest collections.
The net asset value per share climbed to $13.53 from $12.99, a $0.54 increase driven by the unrealized appreciation and the company’s disciplined capital allocation. President Dave Dullum noted that the $0.24 adjusted NII per share is sufficient to cover the company’s monthly distributions and that total assets have grown $90 million to $1.1 billion, underscoring a healthy balance sheet. He also highlighted a $130 million investment in three new portfolio companies during the first half of fiscal 2026, describing the run rate as “pretty good relative to where we were in fiscal ’25.”
Chief Financial Officer Taylor Ritchie explained that the $1.0 million rise in interest income was a result of continued growth in the debt portfolio, while the $5.1 million increase in accruals for capital‑gain‑based incentive fees and higher interest expense pushed net expenses to $21 million. Ritchie emphasized that the company’s weighted‑average yield on debt investments increased modestly after collecting past‑due interest, indicating a slight improvement in portfolio quality.
Management acknowledged a competitive market environment and ongoing uncertainty from tariffs and a potential economic slowdown. Despite these headwinds, the company remains confident in its pipeline, with Dullum stating that the firm is “at a pretty good run rate relative to where we were in fiscal ’25” and that active deal flow positions it well for additional buyouts before year‑end. The company’s guidance for the remainder of the fiscal year remains unchanged, signaling confidence in maintaining profitability amid market volatility.
The earnings beat and revenue exceed expectations largely because of disciplined cost management, a favorable mix of interest income, and strong unrealized gains in the equity portfolio. The decline in net investment income reflects a shift toward lower‑yielding debt instruments and the impact of one‑time restructuring losses, but the overall investment income trend remains positive, supporting the company’s ability to fund distributions and pursue growth opportunities.
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