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Thursday, November 6, 2025 at 6 p.m. ET CALL PARTICIPANTS Chief Executive Officer — David SprengChief Investment Officer, Runway Growth Capital LLC — Greg GreifeldChief Financial Officer and Chief Operating Officer — Thomas B. Raterman Need a quote from a Motley Fool analyst? Email [email protected] Total Investment Income -- $36.7 million in the third quarter of 2025, up from $35.1 million in the third quarter of 2024.Net Investment Income -- $15.7 million in the third quarter of 2025, an increase from $13.9 million in the third quarter of 2024.Fair Value of Investment Portfolio -- $946 million at September 30, 2025 period-end, a decrease of 7.7% from $1.02 billion as of September 30, 2024.Healthcare and Life Sciences Portfolio Exposure -- Expected to rise to approximately 31% following SWK acquisition, compared to 14% as of September 30, 2025.Loan Repayments -- Seven repayments totaled $199.7 million, with $1.5 million in scheduled amortization.Investment Activity -- 11 investments totaling $128.3 million in funded loans, including allocations to both new and existing companies.Equity Investment in Runway CADMA One JV -- $6.7 million added during the quarter.Net Assets -- $489.5 million, down from $498.9 million.Dividend Coverage -- Base dividend of $0.33 per share fully covered by net investment income of $0.43 per share.Weighted Average Portfolio Risk Rating -- Increased to 2.42 from 2.33, on a 1 (best) to 5 (worst) scale.Dollar-Weighted Loan-to-Value Ratio -- Rose to 31.4% from 29.6% sequentially.Floating Rate Loan Composition -- 97% of the loan portfolio comprised of floating rate assets.Annualized Yield on Debt Portfolio -- 16.8%, up from 15.4% in the previous quarter and 15.9% year-over-year.Operating Expenses -- $21 million, down slightly from $21.2 million in the comparable period.Net Realized Loss on Investments -- $1.3 million, compared to $1.5 million previously; "There really wasn't any specific theme. Most of them were completely idiosyncratic."Nonaccrual Loans -- One loan to Mingle Healthcare with a $4.8 million cost basis and $2.4 million fair market value, accounting for just 0.2% of the total portfolio.Leverage Ratio / Asset Coverage -- 0.92 and 2.09 times, respectively, versus 1.05 and 1.95 at the last period end.Total Available Liquidity -- $371.9 million, with $364 million additional borrowing capacity.Unfunded Commitments -- $143.7 million, including $120.9 million in debt and $22.7 million in equity for the CADMA JV; $30.3 million eligible for draw based on milestones.Total Assets -- $963.3 million at quarter-end.Management Fee -- Adviser agreed to maintain the base management fee at 1.5% despite an increase qualifying for 1.6%.Spillover Income -- Approximately $0.53 per share at quarter-end.Share Repurchase Program -- 397,983 shares repurchased during the quarter under the $25 million authorization.Q4 Regular Distribution -- $0.33 per share declared on November 6.SWK Holdings Acquisition Structure -- NAV for NAV merger, estimated $220 million purchase price composed of $75.5 million in shares (at closing NAV) and ~$145 million in cash; $9 million contributed by the adviser as part of consideration.Anticipated Transaction Timeline -- Closing delayed to early 2026 due to ongoing government shutdown and SEC approval lag.Pro Forma Portfolio & Leverage -- Projected $1.2 billion portfolio on a September 30 pro forma basis and approximately 1.1x leverage.Run Rate Net Investment Income Accretion -- Mid-single-digit percentage expected in the first quarter after close; modest ROE and improved dividend coverage anticipated.Oaktree Ownership Impact -- Percentage ownership position will be reduced post-transaction, with an aim for improved trading liquidity.Average Loan Size -- Expected average loan size of 2% of the portfolio after the SWK merger, supporting diversification.Access to New Debt Markets -- Enlarged scale and diversification may facilitate access to ABS and other markets.Dividend Policy Clarification -- Spreng explained, "as we set it, we said that we would pay up to 50% of the delta between NII per share and the base dividend," citing back‑weighted prepayments and expectations of lower rates.PIK Income -- Composed approximately 11.5% of total investment income; a portion was attributable to structured PIK, which is typically toggled for one or two years.Team Integration -- SWK team to assist with transitional services, portfolio integration, and new originations, per Spreng: "The SWK team, Mickey, will join us for transition services to help us move that portfolio onto the BDC's platform."Shareholder Lockup -- Spreng confirmed, "There's no lockup per se. We do have a key shareholder agreement, and we've outlined the key elements of that shareholder agreement in our SEC filings. But there is no specific lockup."Competitive Dynamics -- Spreng stated, "we have seen a degree of spread compression, but definitely nowhere near what," and expects this to continue in the current rate environment.BC Partners Sourcing -- New investments originate from both legacy and BC Partners platforms; "good split between the two." The pending NAV-for-NAV merger with SWK Holdings will immediately expand Runway Growth Finance Corp. (RWAY +1.85%)’s portfolio by an estimated $242 million, raising healthcare and life sciences sector exposure from 14% to 31% at fair value. Management projects mid-single-digit run-rate net investment income accretion and modest ROE improvements in the first full quarter post-merger, driven by greater scale, higher average yields, and leverage optimization near 1.1 times. Portfolio risk and loan-to-value metrics increased versus the prior period, with only one nonaccrual loan representing 0.2% of total portfolio value. The adviser committed $9 million in cash toward the acquisition that is equivalent to nearly three quarters’ management fee waiver on a pretax basis, and Oaktree’s diminished percentage ownership is expected to enhance liquidity and trading levels in RWAY’s shares. After onboarding SWK, management expects additional opportunity for organic growth by potentially upsizing select loans within the acquired portfolio where capital constraints had previously limited SWK’s position size.Repayments were elevated in the quarter, and management anticipates repayment activity will return closer to normal rates.Share repurchases were constrained during the blackout period tied to SWK deal negotiations, but the $25 million buyback program remains active through May 2026 absent full utilization earlier.Management confirmed portfolio’s nearly exclusive focus on first lien senior secured loans and expects further scale to support greater expense efficiency and improved access to funding markets, including ABS.The SWK team will assist with onboarding and origination in the immediate post-merger period, with future retention dependent on ongoing integration requirements.PIK (payment-in-kind) income this quarter primarily reflected structured terms, and Greifeld said such toggles are "quite bespoke based on the cash flow characteristics of the borrower." INDUSTRY GLOSSARY PIK (Payment-in-Kind): Interest paid in additional debt or equity securities—rather than cash—typically structured for a defined initial period to support borrower liquidity.First Lien Senior Secured Loan: A debt instrument secured by a borrower’s assets, given the highest priority claim in the event of default or liquidation.Nonaccrual Loan: A loan for which the lender no longer accrues interest income due to the borrower’s financial difficulty or inability to pay as agreed.ABS (Asset-Backed Securities): Financial instruments backed by pools of underlying assets, such as loans, used to access specialized debt capital markets. Full Conference Call Transcript David Spreng, Chief Executive Officer, Greg Greifeld, Chief Investment Officer of Runway Growth Capital LLC, our investment adviser, and Thomas B. Raterman, Chief Financial Officer and Chief Operating Officer. Runway Growth Finance's third quarter 2025 financial results were released just after today's market close and can be accessed from Runway Growth Finance's investor relations website at investors.runwaygrowth.com. We have arranged for a replay of the call to be available on the Runway Growth Finance webpage. During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including, without limitation, market conditions caused by uncertainties surrounding interest rates, changing economic conditions, and other factors we identify in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate. And as a result, forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained on this call are made as of the date hereof, Runway Growth Finance assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of SEC-related filings, please visit our website. With that, I will turn the call over to David. David Spreng: Thank you, Quinlan, and thanks everyone for joining us this evening to discuss our third quarter 2025 financial results. Today, I'll discuss our third quarter financial highlights, provide an update on our strategy and growth levers, and recap our recently announced definitive merger agreement to acquire SWK Holdings. Then Greg will discuss our portfolio optimization initiatives and activity. And to conclude, Tom will dive deeper into our financial performance. As I step back and look at what we have accomplished here at Runway Growth since our IPO back in 2021, I'm incredibly proud. Despite a challenging deal environment and significant changes to the venture ecosystem, we've always been proactive in positioning the platform to compete with the best in the business. We have demonstrated our acumen as a strong investor and operator that is dedicated to building an optimal portfolio for our shareholders while remaining disciplined. This has taken the form of both organic and inorganic deal execution to date, and we will continue to evaluate all options that will enhance the platform. For the third quarter, Runway delivered total investment income of $36.7 million and net investment income of $15.7 million. Additionally, we completed 11 investments in new and existing portfolio companies across the high-growth verticals of technology, healthcare, and select consumer sectors, representing $128.3 million in funded loans. We believe our third quarter investment activity is only beginning to show the benefits of our integration within the BC Partners Credit Ecosystem, which allows us to source from a broader set of origination channels and strengthen our ability to execute against our portfolio optimization initiatives. As a reminder, these initiatives include further enhancing the risk profile of our portfolio through diversification and smaller position sizes, expanding our suite of financing solutions, and maximizing our existing commitments through robust monitoring and diligent risk mitigation. Inorganic growth is also a key lever available to us as a part of the BC Partners Credit platform, which we believe sets us apart from our peers. For context, BC Partners Credit has been one of the most active players in BDC consolidation to date. Their experience and our combined network give us an edge in identifying and evaluating attractive portfolios that may be a fit in driving Runway's growth. To that end, in early October, we were excited to announce Runway entered into a definitive merger agreement to acquire SWK Holdings, a specialty finance company with a focus on healthcare and life sciences. SWK provides minimally diluted financing to small and midsized commercial stage healthcare companies. To reiterate, we think this deal makes both strategic and financial sense for Runway. We believe the acquisition of SWK will immediately scale our portfolio by an estimated $242 million, accelerating growth and diversification, expand our position and investment capabilities in the healthcare and life sciences sector, and enhance both our earnings power and overall financial profile as Tom will discuss in more detail. With ever-increasing competition across private markets, we believe this transaction positions us to grow and diversify our asset base and continue delivering value for our shareholders and borrowers. While SWK is a prime example of a complementary investment strategy, we will continue to evaluate all opportunities that align with our disciplined approach to inorganic growth. With that, I'll turn it over to Greg to provide a deeper look at our portfolio activity and outlook on venture debt. Greg Greifeld: Thanks, David. And good evening, everyone. I'll expand a bit on our portfolio activity and how the SWK transaction progresses our objective to diversify our investments by size and industry. As David mentioned, our team is consistently assessing our portfolio and the venture landscape to ensure we are finding the best avenues to deliver attractive risk-adjusted returns for our shareholders. This includes maximizing our existing investments, completing new investments, and adding to the portfolio through inorganic channels. As David mentioned, during 2025, Runway completed 11 investments in new and existing portfolio companies, representing $128.3 million in funded loans. These investments include the completion of a new $10 million investment to Federal Hearings and Appeals Services, funding $7.5 million at close, and the completion of a new $10 million investment to Digicert Inc, funding $9.3 million at close. We also completed investments totaling $97.9 million to existing portfolio companies Kin Insurance, Madison Reed, and Skillshare, and completed follow-on investments with an aggregate amount of $6.9 million to five existing portfolio companies. We'd like to call out that we have reduced our positions in Kin Insurance and Skillshare, which aligns with our strategy to decrease our average hold size. Lastly, we completed a $6.7 million equity investment to Runway CADMA One, our joint venture with CADMA Capital Partners. Turning to our acquisition of SWK, we are immediately scaling our position in the highly attractive healthcare and life sciences sector. The transaction will increase Runway's exposure in the sector to approximately 31% of the overall portfolio at fair value, from 14% as of 09/30/2025. As a reminder, we are focused on the following three key industries: healthcare and life sciences, technology, and select consumer sectors. This transaction expands our commitment to the healthcare and life sciences industries, which we believe is defensive by nature of high barriers to entry given the time and investment needed for FDA approvals as well as limited downside risk and excellent risk-adjusted returns. To give you a sense of SWK's complementary portfolio, I'd like to highlight two standout investments: SkinVee and Journey Medical. SkinVee is a highly integrated prescription system dedicated to delivering customized medications for dermatology patients. SWK's $16 million financing helped the company expand its product offerings, increase its manufacturing capacity, and rapidly grow sales. Journey Medical is a publicly traded company focused on identifying, acquiring, and strategically commercializing innovative, differentiated dermatology products through its efficient sales and marketing model. SWK's $25 million financing helped the company launch Amroci, an innovative rosacea treatment. These companies are exemplary of the high-quality additions to our portfolio as we solidify our standing as a destination of choice for growth investments. Looking ahead, we believe our transaction with SWK is timely and further positions Runway as a serious participant in the consolidation of the venture and growth lending markets. We believe this deal demonstrates our ability to structure, win, and complete transactions, utilizing both cash and equity to drive scale and enhance our market position. Further, it provides a repeatable blueprint that is non-dilutive to shareholders. Now I want to turn the call over to Tom to share more on our financial results. Thomas B. Raterman: Thank you, Greg, and good evening, everyone. Turning now to the third quarter results, we generated total investment income of $36.7 million and net investment income of $15.7 million in 2025, an increase compared to $35.1 million and $13.9 million in 2025. Our weighted average portfolio risk rating increased to 2.42 in 2025 compared to 2.33 in 2025. Our rating system is based on a scale of one to five where one represents the most favorable credit rating. As with previous quarters, we calculated the loan-to-value ratio for our loans in our portfolio at the end of the second quarter and at the end of the third quarter. Our dollar-weighted loan-to-value ratio increased from 29.6% to 31.4%. Our total investment portfolio had a fair value of $946 million, a decrease of 7.7% from $1.02 billion in 2025. Our loan portfolio is comprised of 97% floating rate assets. To reiterate, we've structured our portfolio to be comprised almost exclusively of first lien senior secured loans, reflecting our focus on risk mitigation and diligent portfolio management. We continue to cover our base dividend of $0.33 per share, delivering $0.43 of net investment income in the third quarter. Earnings for the quarter benefited from elevated prepayment income. At the end of the third quarter, we had spillover income of approximately $0.53 per share. Our debt portfolio generated a dollar-weighted average annualized yield of 16.8% in 2025, increasing from 15.4% quarter over quarter and increasing from 15.9% for the comparable period last year. Moving to our expenses, total operating expenses were $21 million for 2025, a decrease from $21.2 million for 2025. We recorded a net realized loss on investments of $1.3 million in 2025, compared to a net realized loss on investments of $1.5 million in '25. During the third quarter, we experienced seven repayments totaling $199.7 million and scheduled amortization of $1.5 million. As of 09/30/2025, we had only one loan on nonaccrual status, to Mingle Healthcare. This loan has a cost basis of $4.8 million and fair market value of $2.4 million or 50% of cost, representing just 0.2% of the total investment portfolio at fair value as of 09/30/2025. As of 09/30/2025, Runway had net assets of $489.5 million, decreasing from $498.9 million at the end of 2025. Of 1.9% compared to $13.66 at the end of 2025. At the end of 2025, our leverage ratio and asset coverage were 0.92 and 2.09 times respectively compared to 1.05 and 1.95 times respectively at the end of 2025. As of 09/30/2025, our total available liquidity was $371.9 million, including unrestricted cash and cash equivalents, and we have borrowing capacity of $364 million. As of 09/30/2025, we had a total of $143.7 million in unfunded commitments, which was comprised of $120.9 million to provide debt financing to our portfolio companies and $22.7 million to provide equity financing to our JV with CADMA. Approximately $30.3 million of our unfunded debt commitments are eligible to be drawn based on achieved milestones. Additionally, as of 09/30/2025, Runway had total assets of $963.3 million, which would have adjusted the fourth quarter 2025 base management fee paid to our external adviser to 1.6% per annum. However, the adviser has agreed to maintain the base management fee at 1.5%. I'd like to expand on David and Greg's commentary and reiterate how we believe our proposed acquisition of SWK enhances our financial profile and grows our shareholder base. As a reminder, we anticipate enhanced earnings supported by the following key drivers. First, by scaling up our portfolio to $1.2 billion on a September 30 pro forma basis. Second, by optimizing our leverage profile at approximately 1.1 times, or the middle of our target range. Third, by benefiting from an attractive target portfolio that offers incremental yield relative to Runway's existing portfolio. Fourth, through greater expense efficiency as a result of our increased scale. We anticipate this transaction will generate mid-single-digit run rate net investment income accretion during the first full quarter following the close and support modest ROE expansion as well as improved dividend coverage. Notably, upon close, this transaction will more than offset the repayment impact our portfolio experienced last quarter. This will contribute to preserving earnings power, maintaining our dividend, ensuring we are on the right trajectory even as shifting rates and a changing venture debt landscape impact the sector. As previously disclosed, the transaction will be a NAV for NAV merger structured as a tax-free reorganization with an estimated purchase price of approximately $220 million. Consideration includes $75.5 million in Runway shares valued at closing NAV per share and approximately $145 million in cash. In support of the transaction and our shareholders, our external investment adviser is also contributing $9 million in cash as part of the consideration. To provide perspective, this significant contribution from the adviser equates to a fee waiver of nearly three full quarters when calculated on a pretax basis. As a result of our expanded shareholder base and trading liquidity, Oaktree's percentage ownership position will be reduced. Oaktree has been an exceptional partner to Runway on our path to becoming a public BDC and we believe this transaction will drive liquidity in our shares, and we hope begin to lift trading levels. Lastly, in tandem with enhancing earnings power, we are lowering our risk profile demonstrated by sector diversification and what we expect to be smaller average loan size of 2%. Improved diversification and scale should enhance our access to new debt financing markets, including ABS and other lending markets. Taking into consideration the ongoing government shutdown, we expect delays in the SEC regulatory approval process and anticipate the close to take place in early 2026. As previously disclosed on 05/07/2025, our board of directors approved a new stock repurchase program of $25 million, which will expire on 05/07/2026 or earlier if we repurchase the total amount of stock authorized for repurchase under the program. During the third quarter, we repurchased 397,983 shares. We'd like to note that our use of the share repurchase program during the quarter was limited as a result of the blackout period associated with the SWK transaction. Finally, on 11/06/2025, our board declared a regular distribution for the fourth quarter of 33¢ per share. With that, operator, please open the line for questions. Operator: Thank you. Star one on your telephone and wait for your name to be announced. To withdraw your question, press 11 again. Our first question will come from the line of Melissa Wedel with JPMorgan. Your line is open. Melissa Wedel: Thank you. I appreciate you taking my questions tonight. First, I appreciate the update on the expected closing date of the SWK merger. Given that's now likely to be in 2026, close date. How should we be thinking about origination activity and repayment activity in 4Q? Should we be thinking about that as sort of a net exit quarter ahead of the onboarding of the other portfolio? David Spreng: Yes. So I would say in terms of repayments, I do think it will be a quarter. We definitely did see an elevated amount, and I would expect relatively muted relative to Q3. Some of those or we had expected some of those repayments in Q4, but ultimately came in Q3. But in terms of origination, you know, we're utilizing the pipeline we have as well as the broader BC Partners credit platform, and you know, seeing many interesting opportunities out there in the market. Melissa Wedel: Okay. I appreciate that. And then as a follow-up, when we think about the integration of the two portfolios, obviously, the existing portfolio is multiples larger than the one that you'll be onboarding and integrating. But can you give us a sense of, like, the pro the yield profile between the two and where you expect that to sort of shake out once the two are combined? Thanks. David Spreng: The yield profile will be slightly greater. The SWK portfolio has a slightly higher yield than our portfolio. And we'll have complete pro formas in the N-14 when filed shortly. I think one other thing to highlight too about the SWK portfolio as you said, it is dollar-wise smaller than ours. And there's a degree to which they were limited with capital constraints in terms of some of the positions. So I think you should expect, once we do move closer to closing, us re-exploring where there's opportunities to upsize the best loans in their portfolio in order to get some organic growth out of this deal as well. Melissa Wedel: Thank you. One moment for our next question. And that will come from the line of Mickey Schleien with Clear Street. Your line is open. Mickey Schleien: Yes. Good evening, everyone. Want to start off by asking about which were the portfolio companies that were the main drivers of the realized loss and the unrealized portfolio depreciation? And do these reflect problems at specific sectors or was it more idiosyncratic? Those losses were mainly in the equity portfolio. And were they are they is there some theme across the equity portfolio that drove those losses? David Spreng: There were some expirations of warrant. There was a liquidation of some IPO shares at less than the carrying cost. There really wasn't any specific theme. Most of them were completely idiosyncratic. Mickey Schleien: Fair enough. You discussed prepayment activity in your remarks, but could you provide us some color on what's driving that activity and do you expect that to continue next year? David Spreng: Yeah. In terms of the activity, I would say that there's a degree to which, you know, we're seeing M&A remain active across our portfolio companies. There's a degree to which some of our companies have outgrown our cost of capital and found refinancing options with cheaper options. But I would say, in general, you know, repayments are a double-edged sword where at some point, you do need to get paid back while you also want to keep the best names on your book. But I would say we do expect a normal course of prepayments to occur from here on out as well. Mickey Schleien: Okay. And on the flip side, obviously, we're very active in terms of investments with increased sourcing from BC Partners. Could you share with us perhaps some idea of what share of the recent deals came from that ecosystem and how do those opportunities differ from your legacy pipeline? David Spreng: Yeah. I'd say that there's definitely a good split between the two. I'd say we're still very actively focused in terms of our legacy pipeline and focus, and that's what we hear, spend all day every day doing. I would say we'll look to share opportunities with them will be a circumstance where the check is something larger than we would want to write in terms of the BDC optimal hold size. And then in terms of things that they'll share with us, you know, that we're not looking for any type of style drift or anything like that. Things that they show us are firmly within the three sectors that we deal with: healthcare, technology, and as well as select consumer. And they have to meet, you know, our ethos of being growth stage businesses, while generally larger than we'll deal with. And also, they have to meet the structural and return profile that matches our portfolio. So I would say, we're definitely showing them things. And in terms of what we're choosing to put in our book that they're showing us, it's the deals that firmly look, smell, and feel like runway deals. Mickey Schleien: That's really helpful. And to follow-up, we've seen very intense competition in the liquid markets and to some extent, in the more conventional direct lending markets. Could you describe the competitive dynamics and the pricing pressures in the venture debt space currently? David Spreng: Yeah. I would say that, you know, we have seen a degree of spread compression, but definitely nowhere near what I think has been seen in the broader middle market as well as broadly syndicated markets. I think that, as rates do drop as well, we have seen less pressure on spreads. It's something I think will continue in this new rate environment. Mickey Schleien: That's interesting. And just a couple of questions on the merger. Could you give us a sense of how you plan to integrate the SWK team into your platform? And let's think of it. How do you expect to integrate the SWK team? David Spreng: The SWK team, Mickey, will join us for transition services to help us move that portfolio onto the BDC's platform. They'll help with the BDC and origination during this time period. And then we'll see how things move after that. But initially, it will be assisting with the transition, assisting with the portfolio relationships, and assisting with new originations in the space for the BDC, assisting the BDC with that. Mickey Schleien: Okay. And my last question, I'm not sure whether it's been discussed, but are the SWK shareholders locked up post-merger? And if they are, what is the schedule of the lockups? David Spreng: There's no lockup per se. We do have a key shareholder agreement, and we've outlined the key elements of that shareholder agreement in our SEC filings. But there is no specific lockup. Mickey Schleien: Okay. I understand. Again, thank you for taking my questions. That's it for me this evening. Operator: Thank you. One moment for our next question. And that will come from the line of Casey Alexander with Compass Point Research. Your line is open. Casey Alexander: Hi. Good evening. Thank you for taking my questions. First off, earlier today, you declared a dividend of 33¢ a share, and yet net investment income per share was 43¢ a share. And usually, you know, there's some relative attachment between the earnings power and the dividend. I'm a little curious how to take that you didn't add on any special distribution. Should we be thinking of that dividend as looking forward to your earnings power in the fourth quarter because of the substantial pay downs? Or how did the board go about making that decision? David Spreng: Well, thanks, Casey, for that question. And as you remember, when we rebased and reset the dividend earlier this year, we looked at the earnings power of the portfolio with the anticipation of several things. One was we knew we were gonna have a heavy year of pre-weighted toward the back end of the year. And second, that we were likely to see several decreases in the interest rates. And so as we set it, we said that we would pay up to 50% of the delta between NII per share and the base dividend. So as we look forward, we had 10¢ per share in prepayment related income during Q4. So as you look forward into Q4, as we rebuild the portfolio, which doesn't happen overnight, deals tend to close at the end of the quarter, so you don't get the benefit of the earnings from the new asset. We're looking at covering the dividend, the base dividend with Q4 earnings. Casey Alexander: Okay. And secondly, the SWK team, do they currently have the ability to make new loans and if they do, do you guys have any say on any new loans that they would make? David Spreng: Well, as you might expect as part of the merger agreement, there are interim operating covenants. And so while they're still an independent company, any modifications to loans are worked through with Greg and his team and our investment committee. And, in all likelihood, we would look at doing any upsizes or new opportunities, either jointly or as part of the runway portfolio going forward. Casey Alexander: Okay. Thank you. Alright. Thanks for taking my questions. Thanks, Casey. Appreciate you being on tonight. Operator: One moment for our next question. And that will come from the line of Erik Zwick with Lucid Capital Markets. Your line is open. Erik Zwick: Thanks. Good evening. Just curious if you could provide any characteristics of the loan that you added to the CADMA JV and why it was a good fit for, you know, that vehicle as opposed to your primary portfolio. David Spreng: Yeah. It was a loan that definitely is firmly a growth loan. I don't believe that we have explicitly named the portfolio within it. But in general, you're gonna see either some partial allocations of loans that we've done in the BDC, but you'll also see some other deals that are very similar to runway loans, but for one reason or another, better suited to come into there. Erik Zwick: And then, so switching gears just a little bit. The PIK income is, I guess, the quarter comprised about 11.5% of total investment income. Can you provide just a breakdown between what is if there if there kind of split between structured PIK versus credit-related PIK and just kind of any thoughts on the overall level of the contribution? David Spreng: Well, as you know, there's good PIK, and there's bad PIK. And I don't have the number at my fingertips. But, in this quarter, there are a number of transactions that had structured PIK as a part of it. There were two deals in 2024 that had structured PIK going forward. That is not the entirety of the loan. But it's a portion of the loan. Erik Zwick: That's helpful. And how long or is that if it's, you know, at the beginning structured, how long is that usually you know, provided for that they pay PIK? I assume it kinda rolls off after a certain period of time. Is that correct? David Spreng: That's correct. And Greg can give a little more insight because it's really varied on a deal-by-deal basis. It's quite bespoke based on the cash flow characteristics of the borrower. Greg Greifeld: Yeah. I'd say in general, you know, as you highlighted, there's a portion of the loans where we will structure it that they can have a partial PIK toggle for one or two years. As you can imagine, the company is typically, if not always, opts for the PIK while it's offered. And then depending on either the competitive nature of the deal or the cash flow dynamics of the business, we might allow for, you know, one or one and a half percent of the overall interest rate to be paid for PIK for the life of the loan. Erik Zwick: And then I can see the attractiveness, especially for a growth company to have that PIK toggle at the beginning to have more cash to help supplement growth. I guess, from your perspective, when you structure that in, do you underwrite any differently versus a loan that does not have PIK in it? Greg Greifeld: Yeah. So we're incredibly focused on loan-to-value. And to that point, as you accrue the PIK, you've obviously increased the size of the loan. So we'll do an incremental analysis to make sure that we're comfortable with the loan-to-value once the total PIK has accrued over the life of the loan, so that we don't create any issues with ourselves in terms of getting out over our skis with loan-to-value through accrued PIK. Erik Zwick: Yep. That makes a lot of sense. Thanks for taking my questions. Greg Greifeld: Thanks. Thank you. As a reminder, if you would like to ask a question, our next question comes from the line of Christopher Nolan with Ladenburg Thalmann. Your line is open. Christopher Nolan: Hey, guys. Do you expect the deal to be accretive in 2026? David Spreng: We do. It will be it should be accretive in the first full quarter after closing. We're hopeful that we'll get this closed as early in Q1 as possible, and some of that's really out of our control at this point with the government shutdown and the number of days that they have to review our filings. Christopher Nolan: And for a merger like this, correct me if I'm wrong, but all the of the acquired company are marked at fair value. Did you guys reevaluate that fair value? And if so, is there the possibility of some OID accretion or discount accretion following the deal close? David Spreng: You've been sitting in the meetings. You must have our offices bugged because those are things that we're looking at right now, Chris. Yeah. There is the possibility. So we will set NAV the way the price is determined at closing. The value is determined at closing is there's a fair value mark prepared by SWK. We will adopt that fair value mark, and that's then compared to effectively the look-through price. So there is the potential for some OID accretion over time. Christopher Nolan: Great. Two more questions. One, is the shares gonna be issued based on NAV per Runway's NAV or on the current Runway share price? David Spreng: No. It will be a NAV for NAV merger. So it'll be issued at our current NAV determined forty-eight hours before closing. Christopher Nolan: Final question. What stage development is the typical company's that SWK invests in, please? Greg Greifeld: Yeah. I would say SWK targets pretty much the same space that we're in. When you look at the scale of the businesses, most of them are generating meaningful revenue, still in growth phase. So still, pre-profit for the most part. But I would say that there really is a tremendous amount of strategic overlap. And as we've looked at their book and really gotten to know it, it does have a lot of the same structural elements and just underwriting ethos that we see in our existing healthcare and life sciences book. So these companies will be right at home in our portfolio. Christopher Nolan: Got it. Okay. Thank you. Operator: Thank you. That is all the time we have for question and answers. I would now like to turn the call over to Mr. David Spreng for any closing remarks. David Spreng: Thank you, operator. We look forward to making continued strides on the objectives we outlined upon joining the BC Partners Credit platform. Thank you all for joining us today. And we will see you in the New Year to discuss our fourth quarter 2025 financial results. Operator: This concludes today's program. Thank you all for participating. You may now disconnect.
