0001104659-26-024735
SEC filingWhiteHorse Finance, Inc. reported a net increase in net assets resulting from operations of $14.3 million for FY 2025, a 32.1% increase from $10.9 million in FY 2024. Total investment income decreased by 21.7% to $72.7 million from $92.8 million, primarily due to lower interest income, PIK income, and fee/dividend income. Total expenses decreased by 16.2% to $46.6 million, driven by lower interest expense, base management fees, and performance-based incentive fees. The company experienced net realized losses of $35.6 million, partially offset by net unrealized appreciation of $23.8 million. Key drivers included portfolio yield compression, reduced portfolio size, and significant realized losses on specific investments. The company maintained its RIC status with $36.6 million in distributions declared.
WhiteHorse Finance reported a net increase in net assets resulting from operations of $14.3 million for FY 2025, representing a 32.1% increase from $10.9 million in FY 2024. This improvement occurred despite a 21.7% decline in total investment income to $72.7 million, driven by lower interest income ($53.8 million vs $66.5 million), reduced PIK income ($2.2 million vs $7.3 million), and decreased fee/dividend income ($2.3 million vs $2.4 million). Total expenses decreased 16.2% to $46.6 million, primarily due to lower interest expense ($23.1 million vs $27.9 million), base management fees ($11.1 million vs $12.1 million), and performance-based incentive fees ($6.3 million vs $9.3 million). The company experienced significant net realized losses of $35.6 million, partially offset by net unrealized appreciation of $23.8 million.
Investment income declined across all components year-over-year. Interest income (excluding PIK) decreased $12.7 million to $53.8 million, primarily attributable to lower yields, investments placed on non-accrual status, and reduced portfolio size. The weighted average yield on the debt portfolio (excluding STRS JV) decreased to 9.2% from 10.4%. PIK income declined $5.1 million to $2.2 million, representing only 3.0% of total investment income compared to 7.8% in the prior year. Fee and dividend income decreased slightly by $0.1 million to $2.3 million. Interest and dividend income from STRS JV decreased $2.3 million to $14.4 million due to lower base rates and portfolio yields.
Net investment income decreased 29.9% to $26.1 million from $37.2 million, resulting in a net investment income margin (as percentage of total investment income) of 35.9% compared to 40.1% in the prior year. The decline in profitability was driven by the compression in portfolio yields and reduced income generation. Operating expenses as a percentage of total investment income improved to 64.1% from 59.9%, primarily due to the reduction in interest expense and management fees. The company recognized an irrevocable fee waiver of $0.2 million for performance-based incentive fees. No capital gains incentive fee expense was incurred for either year.
Operating activities provided $77.3 million in cash, primarily from net proceeds received from realizations and repayments on investments ($249.7 million), partially offset by acquisition of investments ($191.7 million). Financing activities used $75.4 million, primarily for debt repayments ($242.0 million), distributions to stockholders ($36.6 million), and purchases of common stock ($7.4 million). As of December 31, 2025, total assets were $615.1 million, with investments at fair value of $578.6 million. Total liabilities were $355.3 million, including $328.5 million in debt outstanding. The company had $29.7 million in cash and cash equivalents, with $100.0 million available under the Credit Facility (subject to borrowing base limitations).
The company faces ongoing challenges including interest rate sensitivity, competitive market conditions, and portfolio company performance risks. Management noted that subsequent to December 31, 2025, they expect to reduce fair value marks on two portfolio companies (The Kyjen Company and Camarillo Fitness Holdings) based on recent financial information. The company's board authorized a $7.5 million increase in the stock repurchase program to $22.5 million. WhiteHorse Finance must maintain its RIC status by distributing at least 90% of ordinary income and realized net short-term capital gains. The company's ability to grow is dependent on obtaining additional capital, as substantially all income is distributed to stockholders.