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Second-quarter earnings improved significantly: Net investment income rose to $18.2 million, or $0.43 per share, from $10.6 million in the prior quarter, exceeding the $0.33 base dividend. The SWK Holdings acquisition expanded the portfolio to $1.2 billion and contributed approximately $0.05 per share of quarterly income.
Credit results were mixed: Runway recorded $45.3 million in net realized losses, mainly from Marley Spoon and Blueshift, although management said much of the impact had already been reflected in prior-period unrealized losses. Portfolio credit metrics improved, with 94% of investments rated category 3 or better and an average risk rating of 2.34.
Management is pursuing capital allocation opportunities amid a steep valuation discount: Shares traded at more than a 49% discount to NAV, prompting ongoing repurchases and a commitment from BC Partners affiliates to buy up to 10% of outstanding shares while the discount remains substantial. The company declared a $0.33-per-share third-quarter distribution and appointed Mike Rovner as co-CEO.
Runway Growth Finance (NASDAQ:RWAY) reported higher second-quarter net investment income as the business integrated assets acquired through its April purchase of SWK Holdings, while management emphasized portfolio diversification, disciplined underwriting and share repurchases amid a substantial discount to net asset value.
For the quarter ended June 30, 2026, the business development company generated total investment income of $37.0 million and net investment income of $18.2 million, up from $29.5 million and $10.6 million, respectively, in the first quarter. Net investment income was $0.43 per share, compared with the company's $0.33 per-share base dividend.
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Chief Financial Officer Carmela Thomson said the company expects to cover its dividend on a full-year basis, though quarterly net investment income may fluctuate with portfolio size and one-time items. The board on Aug. 5 declared a third-quarter regular distribution of $0.33 per share. Runway had approximately $0.68 per share of spillover income at quarter-end.
The company's investment portfolio had a fair value of $1.2 billion as of June 30, up 35% from $886.3 million in the prior quarter, including the closing of the SWK transaction. Net assets increased to $502.6 million from $438.2 million, while net asset value per share declined 2% to $11.91.
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Thomson attributed the per-share NAV decline primarily to $8.1 million, or $0.22 per share, in transaction expenses associated with the SWK acquisition.
Management said the acquisition added diversification across industries and reduced average position sizes. Since June 30, 2025, average loan size as a percentage of cost has declined by approximately 28%, according to Co-Chief Executive Officer David Spreng.
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SWK contributed $0.05 per share of net investment income accretion in the quarter, 26% growth in yielding assets and a $3.4 million realized gain, Thomson said. In response to an analyst question, she said the $0.05 figure represented the quarterly run-rate contribution from SWK assets, though it could change as loans repay.
Runway funded four investments in new and existing portfolio companies and follow-on investments in six portfolio companies during the quarter, totaling $85.8 million. It also funded roughly $239.6 million of investments obtained in the SWK transaction through a mix of cash and equity.