Horizon Technology Finance Corporation Reports Decrease in Net Assets and Investment Income for 2024

Horizon Technology Finance Corporation (HTFC) reported a net decrease in net assets resulting from operations of $5.6 million for the year ended December 31, 2024, compared to a net decrease of $17.2 million in 2023. Total investment income decreased by 11.9% to $99.9 million in 2024, primarily due to a decrease in average earning debt investments and lower fee income from prepayments. Total expenses increased slightly by 0.2% to $50.7 million in 2024. The company recorded net realized losses on investments of $34.6 million and net unrealized depreciation of $18.8 million during 2024.

Significant changes compared to the previous fiscal year include a decrease in total investment income and a slight increase in total expenses. The decrease in investment income was primarily attributed to a reduction in average earning debt investments and lower fee income from prepayments, while the increase in expenses was minimal. The company also experienced a substantial increase in net realized losses and net unrealized depreciation on investments compared to 2023. The increase in the number of investments with internal credit ratings of 1 or 2 was primarily due to portfolio companies' low cash positions, a difficult equity fundraising market, and underperformance.

During 2024, HTFC sold 6,300,095 shares of common stock under its ATM program, receiving net proceeds of approximately $66.4 million. The company also completed a $20 million debt investment to Pivot Bio, Inc., which was repaid shortly thereafter. Other significant developments included new debt and equity investments in several companies and the approval of a new investment management agreement with its advisor, Horizon Technology Finance Management LLC. A change in control of the advisor is expected to close in the first quarter of 2025.

As of December 31, 2024, HTFC held $638.8 million in debt investments, $18.3 million in warrants, $26.2 million in other investments, and $26.2 million in equity positions. The company's debt investments had a dollar-weighted average term of 52 months from inception and a dollar-weighted average remaining term of 35 months. Substantially all debt investments had an original committed principal amount between $1 million and $40 million. The company's net assets were $336.2 million, and all debt investments were secured.

HTFC intends to continue making monthly distributions to stockholders. The company's outlook is subject to various risks, including those related to its advisor, its investments in development-stage companies, economic conditions, interest rate fluctuations, and regulatory changes. The company highlighted the potential for significant losses if its investments do not meet expectations or if market conditions deteriorate. The company also noted that a portion of future distributions may be a return of capital.