Prospect Capital reported fiscal fourth-quarter net investment income of $77.7 million, down from $78.5 million in the prior quarter and $79.0 million a year earlier. Net investment income per common share slipped to $0.15 from $0.16 in March and $0.17 in the June 2025 quarter.
Net income turned to a loss of $38.1 million, compared with a $26.4 million profit in the March quarter and a $226.4 million loss a year earlier. On a per-share basis, that was a loss of $0.08 versus earnings of $0.05 in the prior quarter and a loss of $0.50 a year ago.
Distributions to common shareholders totaled $58.0 million, down from $65.4 million in the March quarter and $61.2 million in the year-ago period. The quarterly dividend was cut to $0.115 per share from $0.135 in both comparable periods. Prospect said it declared two monthly payments of $0.035 per share for September and October 2026.
Net asset value per common share fell to $5.71 at June 30 from $6.05 at March 31 and $6.56 a year earlier. Common shareholders’ NAV declined to $2.93 billion from $2.95 billion in March and $2.99 billion a year ago.
Total assets rose to $6.45 billion from $6.38 billion in the prior quarter but were below $6.80 billion a year earlier. Total liabilities increased to $1.95 billion from $1.82 billion in March, while perpetual preferred stock dropped to $1.57 billion from $1.61 billion.
Balance sheet cash plus undrawn revolving credit capacity fell to $1.60 billion from $1.75 billion in March, but was up from $1.32 billion a year ago. Net-of-cash debt to total assets improved to 28.6% from 30.4% a year earlier, though it worsened from 27.0% in March. The net-of-cash debt-to-equity ratio rose to 40.7% from 37.6% in March, while the net-of-cash asset coverage ratio eased to 345% from 366%.
The portfolio’s first-lien mix increased to 72.5% at cost from 72.0% in March and 70.5% a year ago. Second-lien exposure fell to 11.9% from 12.4% in March and 14.4% a year earlier. Subordinated structured notes were eliminated from the portfolio, down from 0.1% in March and 0.6% a year earlier.
At fair value, equity investments were 23.2% of the portfolio, up from 23.5% in March but above 21.0% a year earlier. Non-accrual loans were 0.7% of total assets, unchanged from March and up from 0.3% a year earlier.
Total investments at cost were $6.32 billion, up from $6.19 billion in March but down from $6.69 billion a year earlier. On a fair value basis, total investments were $6.34 billion, little changed from $6.30 billion in March and below $6.67 billion a year earlier.
Prospect’s portfolio companies numbered 91 at June 30, down from 92 in March and 97 a year earlier. The company was invested across 31 industries, unchanged from March and down from 33 a year earlier.
Originations in the June quarter totaled $166.3 million, up from $115.3 million in the March quarter. Repayments and sales fell to $45.8 million from $222.2 million, leaving net originations of $120.5 million versus net repayments and sales of $107.0 million in the prior quarter.
Middle-market investments accounted for 90.5% of originations in the June quarter, down from 94.2% in March. Real estate represented 9.5% of originations, up from 5.4%.
Prospect said its middle-market lending strategy represented 85% of investments at cost at quarter-end. The company’s first-lien mix within that strategy rose to 72.5% from 70.5% a year earlier, while second-lien exposure fell to 11.9% from 14.4%.
The company also said it completed the sale of Valley Electric on July 1 for total consideration of about $328 million. Prospect said June 30 revolver borrowings of $562.3 million would have been $322.7 million on a pro forma basis if the sale proceeds had been received earlier and used to repay debt. As a result of these announcements, the company's shares have moved -0.83% on the market, and are now trading at a price of $2.261. If you want to know more, read the company's complete 8-K report here.
