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Varagon Capital Corporation — Third Quarter 2026 Earnings Summary

  • Financial Performance:

    • Net Investment Income (NII) per share was $0.23 for Q3 2026, equating to a 10.2% annualized NII yield.
    • Earnings per share (EPS) were $0.18 for Q3 2026, compared to $0.33 in Q3 2025, $0.24 in Q4 2025, $0.03 in Q1 2026, and $0.17 in Q2 2026.
    • Net asset value (NAV) per share was $8.93 as of September 30, 2026, down from $9.26 in Q3 2025 and $8.98 in Q2 2026.
    • Total investments at fair value were $818,996 thousand in Q3 2026, compared to $819,796 thousand in Q3 2025 and $836,632 thousand in Q2 2026.
    • Net realized loss per share was $(0.06) for Q3 2026, compared to a net realized gain of $0.01 in Q2 2026 and a loss of $(0.01) in Q3 2025.
    • Net change in unrealized appreciation per share was $0.01 for Q3 2026, compared to $(0.07) in Q2 2026 and $0.10 in Q3 2025.
    • Total borrowings outstanding were $468,100 thousand in Q3 2026, down from $499,600 thousand in Q2 2026 and $459,100 thousand in Q3 2025.
    • Debt-to-equity ratio was 1.26x in Q3 2026, compared to 1.34x in Q2 2026 and 1.19x in Q3 2025.
    • Total expenses were $11,412 thousand in Q3 2026, down from $11,445 thousand in Q2 2026 and $12,958 thousand in Q3 2025.
    • Interest expenses and credit facility fees were $7,584 thousand in Q3 2026, compared to $7,468 thousand in Q2 2026 and $8,060 thousand in Q3 2025.
    • Net increase in net assets resulting from operations was $7,487 thousand in Q3 2026, compared to $7,172 thousand in Q2 2026 and $13,762 thousand in Q3 2025.

  • Guidance and Future Outlook:

    • The company declared a fourth-quarter distribution of $0.23 per share, maintaining the 10.2% annualized distribution yield.
    • No specific forward guidance on revenue, earnings, or market trends was provided in the presentation.

  • Business Segments and Product Lines:

    • The portfolio consists of 121 portfolio companies as of September 30, 2026, with 100% sponsor-backed and 100% floating-rate investments.
    • The weighted average current yield for the total portfolio at amortized cost was 9.8% in Q3 2026, up from 9.6% in Q2 2026 and 10.5% in Q3 2025.
    • The weighted average current yield for the total portfolio at fair value was 10.7% in Q3 2026, up from 10.3% in Q2 2026 and 12.2% in Q3 2025.
    • Portfolio repayments totaled $16.3 million and gross deployment was $10.5 million during the third quarter of 2026.
    • The portfolio includes investments across various sectors including Senior Direct Lending, Health Care Providers & Services, Professional Services, Health Care Equipment & Supplies, and IT Services.
    • Top portfolio companies by investment include Bebright MSO, LLC, SGA Dental Partners Sub Holdings, LLC, AAMP Global Holdings, Inc., UHY Advisors, Inc., VRC Companies, LLC, OIS Management Services, LLC, Basin Innovation Group, LLC, Advantage HCS LLC, MDI Buyer, Inc., and Pediatric Home Respiratory Services, LLC.

  • Market and Competitive Landscape:

    • Approximately 90% of investments in the portfolio had an Internal Performance Rating of 1 or 2 as of September 30, 2026.
    • The weighted average interest coverage at fair market value was 2.3x as of September 30, 2026.
    • The portfolio is 100% floating rate, with a 2.0% PIK (Payment-in-Kind) percentage of total investment income over the last twelve months.

  • Risks and Challenges:

    • Three portfolio companies held loans on non-accrual status as of September 30, 2026, representing 0.7% of total investments at fair value and 1.9% at amortized cost.
    • The presentation notes that there can be no assurance that the weighted average yield will remain at its current level.
    • Forward-looking statements are subject to risks including changes in financial, capital, and lending markets; general economic, political, and industry trends; and dependence on the general economy.
    • The company warns that an investment is speculative and involves a high degree of risk, with no guarantee that investment objectives will be achieved.

  • Management Commentary and Tone:

    • Management highlighted the stability of the distribution yield, maintaining $0.23 per share for both Q3 and Q4 2026.
    • The tone reflects a focus on portfolio quality, noting that 90% of investments are rated 1 or 2, while acknowledging the presence of non-accrual assets.
    • No direct quotes from management were included in the presentation slides.

  • Analyst Questions and Answers:

    • No analyst questions and answers were included in the provided presentation slides.

  • Other Key Points:

    • The company has a total of 41,538,726 common shares outstanding as of September 30, 2026.
    • The 2026 Notes and 2028 Notes have carrying values inclusive of changes in fair value resulting from a hedge accounting relationship.
    • The VCC CLO 1, LLC facility has a weighted average stated interest rate of 5.6% with a maturity date of October 20, 2036.
    • The SMBC Facility has a weighted average stated interest rate of 6.1% (SOFR + 2.125%) with a maturity date of August 9, 2029.
    • The 2026 Notes carry a 9.3% stated interest rate with a maturity date of December 21, 2026.
    • The 2028 Notes carry a 9.3% stated interest rate with a maturity date of December 21, 2028.
    • Internal Performance Rating 5 investments, which are not anticipated to be repaid in full, represented 1.7% of the portfolio at fair value as of September 30, 2026.