Prospect Capital Announces June 2026 Results

NEW YORK, Aug. 20, 2026 (GLOBE NEWSWIRE) -- Prospect Capital Corporation (NASDAQ: PSEC) (“Prospect”, “our”, or “we”) today announced financial results for our fiscal quarter and fiscal year ended June 30, 2026.

FINANCIAL RESULTS

CASH COMMON SHAREHOLDER DISTRIBUTION DECLARATION

Prospect is declaring distributions to common shareholders as follows:

Taking into account past distributions and our current share count for declared distributions, since inception through our October 2026 declared distribution, Prospect will have distributed $22.14 per share to original common shareholders, aggregating over $4.8 billion in cumulative distributions to all common shareholders.

Since Prospect’s initial public offering in July 2004 through June 30, 2026, Prospect has invested approximately $23 billion in more than 450 investments, exiting over 350 of these investments.

Since Prospect's initial public offering in July 2004 through June 30, 2026, Prospect's exited investments resulted in an investment level exited gross internal rate of return ("IRR") of approximately 12% (based on total capital invested of approximately $13.4 billion and total proceeds from such exited investments of approximately $17.2 billion).

In Prospect’s primary business of middle market lending since 2004, Prospect’s exited investments resulted in an investment level exited gross IRR of approximately 14.4% (based on total capital invested of approximately $11.5 billion and total proceeds from such exited investments of approximately $14.7 billion), with an annualized realized loss rate of 0.2%.

Drivers focused on optimizing our business include:

(1) rotation of assets into and increased focus on our core business of first lien senior secured middle market loans (with our first lien mix increasing 840 basis points to 72.5% (based on cost) from June 2024), including investments in companies with smaller funded private equity sponsors, independent sponsors, and no third party financial sponsors;

(2) reduction in our second lien senior secured middle market loans (with our second lien mix decreasing 454 basis points to 11.9% (based on cost) from June 2024);

(3) exit of our subordinated structured notes portfolio (with our subordinated structured notes mix decreasing 837 basis points to 0.0% (based on cost) from June 2024);

(4) exit of targeted lower yielding equity linked assets, including real estate properties (with six additional properties sold in the fiscal year ended June 2026) and certain corporate investments (such as the exit of Echelon Transportation, LLC in February 2026 and Valley Electric Company, Inc. in July 2026), with other potential exits targeted and in process;

(5) enhancement of portfolio company operating performance and profitability, including through adoption of AI and automation initiatives focused on enhancing revenues and producing cost efficiencies; and

(6) utilization of our cost effective floating rate revolver (which significantly matches our majority floating rate assets) while continuing to operate with one of the lowest debt leverage levels in the industry (28.6% net of cash debt to total assets as of June 30, 2026, which did not reflect the immediately deleveraging impact of the Valley Electric Company, Inc. (“Valley Electric”) sale that closed on July 1, 2026).

On July 1, 2026, Prospect closed the successful sale of its portfolio company Valley Electric, with total consideration of approximately $328 million (subject to post-closing adjustments and payments). Over the life of the Valley Electric investment since 2012 and including expected net exit proceeds of approximately $281 million (including potential post-closing adjustments and payments), together with prior interest on debt, equity distributions, and other cash flow streams, Prospect achieved a 20.5% realized gross annualized internal rate of return (“IRR”) and 4.8 times multiple of invested capital.

On June 30, 2026, $562.3 million was drawn under our current $2.1 billion revolver. Such drawn amount would have been $322.7 million on a pro forma basis assuming that the cash received on July 1, 2026, from the sale of Valley Electric had been received previously and repaid borrowings under our revolver.

In our middle market lending strategy, which represented 85% of our investments at cost as of June 30, 2026, we continued our focus on first lien senior secured loans during the quarter. Middle market investments comprised 91% of our $166.3 million of originations during the June 2026 quarter. Investments during the quarter included new first lien senior and secured loan investments in Safety Solutions Financing, LLC (a provider of fire security products and services), Abacus Dermatology Management, LLC (a management services organization), and Eyefive, LLC (d/b/a Shipoffers, a provider of on-demand product and order fulfillment services), as well as follow-on investments in existing portfolio companies to support acquisitions, working capital needs, organic growth initiatives, and other objectives.

As of June 30, 2026, our portfolio included 2.3% (based on fair market value) of investments in software companies, significantly lower than the 22% average across business development companies included in a June 9, 2026 Oppenheimer equity research report.

Our real estate property portfolio at National Property REIT Corp. (“NPRC”) totaled 14.2% of our investments at cost as of June 30, 2026 and continued its focus on already developed and occupied cash flow multifamily investments. Since the inception of this strategy in 2012 and through June 30, 2026, we have exited 58 property investments that have earned an unlevered investment-level gross cash IRR of 24% and cash on cash multiple of 2.4 times. We exited six property investments in the current fiscal year through June 30, 2026 that earned an unlevered investment-level gross cash IRR of 18% and cash on cash multiple of 2.3 times. The remaining real estate property portfolio as of June 30, 2026 included 52 properties and paid us an income yield of 5.3% for the quarter ended June 30, 2026. These properties provide from time to time opportunities for Prospect to exit certain such investments and recycle into more and higher yielding corporate first lien senior secured loans with selected equity linked investments outside of NPRC. Our aggregate investment in NPRC included a $185 million unrealized gain as of June 30, 2026.

Our senior management team and employees own 26.7% of all common shares outstanding or approximately $0.8 billion of our common equity as measured at NAV.

PORTFOLIO UPDATE AND INVESTMENT ACTIVITY

During the March 2026 and June 2026 quarters, investment originations (including follow on investments in existing portfolio companies) and repayments were as follows:

For additional disclosure see “Primary Origination Strategies” at the end of this release.

ARTIFICIAL INTELLIGENCE AND AUTOMATION INITIATIVES

Prospect, together with affiliates, and including portfolio company executives and external advisors, has a broad and deep cross-functional team that includes software and information technology engineers, portfolio company operations professionals, and other individuals focused on bringing best practice artificial intelligence (“AI”) and automation initiatives to both Prospect’s operations and that of its portfolio companies, especially those companies where Prospect holds not just senior secured debt but also equity, whereby Prospect can capture economic upside from profit enhancements (including both revenue increase projects as well as cost efficiency projects) in such businesses. Examples of portfolio company use cases include:

• First Tower using AI and machine learning to improve credit scoring and decisioning (further reducing loss rates and expanding approvals to additional creditworthy borrowers) and to target pre-qualified prospects (with cross-sell and re-borrow opportunities), in addition to various ongoing AI projects designed to deploy customer service agents, automate collections communications, and detect fraud;
  
  
• Town & Country continuing to prioritize AI to optimize operations and support growth initiatives, including investing in a dedicated AI team and equipping all employees with AI tools. For example, the team has deployed an AI agent that generates design concepts based on retailer, brand, packaging, and product guidelines;
  
  
• InterDent executing on AI initiatives for diagnostic imaging patient treatment plans, clinician automatic credentialling, revenue cycle management collection improvement, recruiting (reducing time to fill), call center efficiency/effectiveness boosting, and other projects;
  
  
• Pacific World using AI for consumer insight testing for new product development, optimizing accounts receivable collections review and dispute processes, and building an enterprise data warehouse unifying finance, marketing, and sales data that makes siloed data accessible to the entire organization;
  
  
• Ubique utilizing AI to benchmark competitor products across competitor websites against its own product portfolio, informing each of product development and sales strategy;
  
  
• Mity hiring a new head of technology who is deploying AI to certain business processes, with an initial focus on sales-related activities, including lead generation, customer outreach, account executive handoffs, and data integration;
  
  
• Refuel deploying an AI-driven lead generation engine to identify, qualify, and convert sales opportunities;
  
  
• National Property REIT Corp rolling out AI across its multifamily platform, including dynamic pricing and revenue management to maximize revenue per available unit; AI-driven applicant screening that evaluates credit, rental history, and employment for consistent and unbiased risk scoring; LLM-based leasing communication and call analytics to improve prospect-to-lease conversion, automated renewals pricing, and outreach to reduce tenant turnover; and AI-assisted preventative maintenance that flags equipment degradation and property risks; and
  
  
• Prospect applying AI tools to specific processes within its own operations. First-pass review of investor due diligence questionnaires, which frequently run to several hundred questions, are drafted from the firm's own prior submissions rather than assembled manually. Portions of quarter-end reporting and reconciliation for Prospect's finance vehicles have been automated. These are process-level efficiencies in back-office and administrative work, while investment decisions continue to be made by Prospect's investment professionals and investment committee.
  
  

“Prospect is actively assessing and implementing the best use cases for artificial intelligence and automation within our critical business processes, including both within our investment processes as well as at the portfolio company operational level,” said John Barry, Prospect Chairman and Chief Executive Officer. “We view AI as the most transformational game changer to come along in a generation, and we expect profit enhancing results within our businesses. Prospect has a long history of innovation and first to market accomplishments in the business development company industry, and our embracing of AI and automation is consistent with that innovative culture.”

CAPITAL AND LIQUIDITY

Our multi-year, long-term laddered and diversified historical funding profile over our more than 22 year history has included our current $2.1 billion revolver (aggregate commitments with 48 current lenders), program notes, institutional bonds, convertible bonds, listed preferred stock, and program preferred stock. As of today, we have retired multiple upcoming maturities, including repurchasing $36 million of our next institutional bond maturity, leaving $264.5 million due in November 2026.

On October 30, 2025, we successfully completed the institutional issuance of approximately $167.6 million in aggregate principal amount of senior unsecured 5.5% Series A Notes due 2030 (the "Notes"), which mature on December 31, 2030.

Our unfunded eligible commitments to portfolio companies aggregate approximately $64.6 million, of which $52.4 million is considered at our sole discretion, representing 1.0% and 0.8% of our total assets as of June 30, 2026, respectively.

We currently have three separate unsecured debt issuances aggregating approximately $701.4 million outstanding, not including our program notes, with laddered maturities extending through December 2030. At June 30, 2026, $614.9 million of program notes were outstanding with laddered maturities through March 2052.

At June 30, 2026 our weighted average cost of unsecured debt financing was 4.78%.

We have raised significant capital from our existing perpetual preferred stock offering programs. The perpetual preferred stock provides Prospect with a diversified source of programmatic capital without creating scheduled amortization or maturity risk as we benefit from multiple perpetual preferred tranches.

DIVIDEND REINVESTMENT PLAN

We have adopted a dividend reinvestment plan (also known as our “DRIP”) that provides for reinvestment of our distributions on behalf of our shareholders, unless a shareholder elects to receive cash. On April 17, 2020, our board of directors approved amendments to the Company’s DRIP, effective May 21, 2020. These amendments principally provide for the number of newly-issued shares pursuant to the DRIP to be determined by dividing (i) the total dollar amount of the distribution payable by (ii) 95% of the closing market price per share of our stock on the valuation date of the distribution (providing a 5% discount to the market price of our common stock), a benefit to shareholders who participate.

HOW TO PARTICIPATE IN OUR DIVIDEND REINVESTMENT PLAN

Shares held with a broker or financial institution

Many shareholders have been automatically “opted out” of our DRIP by their brokers. Even if you have elected to automatically reinvest your PSEC stock with your broker, your broker may have “opted out” of our DRIP (which utilizes DTC’s dividend reinvestment service), and you may therefore not be receiving the 5% pricing discount. Shareholders interested in participating in our DRIP to receive the 5% discount should contact their brokers to make sure each such DRIP participation election has been made through DTC. In making such DRIP election, each shareholder should specify to one’s broker the desire to participate in the "Prospect Capital Corporation DRIP through DTC" that issues shares based on 95% of the market price (a 5% discount to the market price) and not the broker's own "synthetic DRIP” plan (if any) that offers no such discount. Each shareholder should not assume one’s broker will automatically place such shareholder in our DRIP through DTC. Each shareholder will need to make this election proactively with one’s broker or risk not receiving the 5% discount. Each shareholder may also consult with a representative of such shareholder’s broker to request that the number of shares the shareholder wishes to enroll in our DRIP be re-registered by the broker in the shareholder’s own name as record owner in order to participate directly in our DRIP.

Shares registered directly with our transfer agent

If a shareholder holds shares registered in the shareholder’s own name with our transfer agent (less than 0.1% of our shareholders hold shares this way) and wants to make a change to how the shareholder receives dividends, please contact our plan administrator, Equiniti Trust Company, LLC by calling (888) 888-0313 or by mailing Equiniti Trust Company LLC, PO Box 10027, Newark, New Jersey 07101.

EARNINGS CONFERENCE CALL

Prospect will host an earnings call on August 21, 2026 at 9:00 a.m. Eastern Time. Dial 888-338-7333. For a replay after August 21, 2026 visit www.prospectstreet.com or call 855-669-9658 with passcode 3651062.

INTERNAL RATE OF RETURN

Internal Rate of Return (“IRR”) is the discount rate that makes the net present value of all cash flows related to a particular investment equal to zero. IRR is gross of general expenses not related to specific investments as these expenses are not allocable to specific investments. Investments are considered to be exited when the original investment objective has been achieved through the receipt of cash and/or non-cash consideration upon the repayment of a debt investment or sale of an investment or through the determination that no further consideration was collectible and, thus, a loss may have been realized. Prospect’s gross IRR calculations are unaudited. Information regarding internal rates of return are historical results relating to Prospect’s past performance and are not necessarily indicative of future results, the achievement of which cannot be assured.

All track record data herein is as of 6/30/2026, unless otherwise noted. Middle-market lending track record segmentation by EBITDA represents EBITDA at the date of initial investment.

ANNUALIZED NET REALIZED LOSS RATE

Annualized net realized loss rate defined as realized gains/(losses) on investments as a percentage of total invested capital since inception, divided by the number of years since inception for the respective investments. Numbers may not add up to precise totals due to rounding.

PRIMARY ORIGINATION STRATEGIES

Our primary investment strategy is investing in private, middle-market companies in the U.S. in need of capital for refinancings, acquisitions, capital expenditures, growth initiatives, recapitalizations and other purposes. Typically, we focus on making investments in middle-market companies with annual revenues of less than $750 million and enterprise values of less than $1 billion. These private, middle-market companies are primarily owned by private equity funded and independent sponsors or us, as well as by a portfolio company’s management team, founder(s), or other investors. Our typical investment involves a senior and secured loan of less than $250 million.

Our investments in senior and secured loans are generally senior debt instruments that rank ahead of unsecured debt and equity of a given portfolio company. These loans also have the benefit of security interests on assets of the applicable portfolio company, which often rank ahead of any other security interests. We also make equity and equity-linked investments with capital-appreciation potential (such as senior and secured convertible debt, preferred equity, common equity and warrants).

We also invest a lesser amount of our assets in senior and secured debt and controlling equity positions in real estate investment trusts (“REIT” or “REITs”). The real estate investments of National Property REIT Corp. (“NPRC”) are in various classes of developed and occupied real estate properties that generate current yields, including multi-family properties and other tenant-diversified properties; historically, NPRC made investments in structured credit (primarily debt tranches). We historically invested in structured credit (primarily equity tranches).

We may also invest in other strategies and opportunities from time to time that the Investment Adviser views as attractive. The Investment Adviser may continue to evaluate other origination strategies in the ordinary course of business with no specific top-down allocation to any single origination strategy.

We directly originate the significant majority of our investments through our long-term relationships with private equity funded and independent sponsors, financial intermediaries, and management teams, as well as other sources. We seek to maximize returns, including both current yield and capital-appreciation potential, and minimize risk for our investors by applying rigorous credit and other analyses and cash-flow and asset-based lending techniques to originate, close, and monitor our investments.

We are consistently pursuing multiple investment opportunities. There can be no assurance that we will successfully consummate any investment opportunity we pursue. If any of these opportunities are consummated, there can be no assurance that investors will share our view of valuation or that any assets acquired will not be subject to future write downs, each of which could have an adverse effect on our stock price.

MIDDLE MARKET LENDING PORTFOLIO COMPANY EBITDA, NET LEVERAGE AND CASH INTEREST COVERAGE

Middle-Market Lending Portfolio Company Net Leverage (“Middle-Market Portfolio Net Leverage”) and Middle-Market Lending Portfolio Company Cash Interest Coverage (“Middle-Market Portfolio Cash Interest Coverage”) provide clarity into the underlying capital structure of PSEC’s middle-market loan portfolio investments and the likelihood that such portfolio will make interest payments and repay principal. Investments in real estate, subordinated structured notes, and equity (for which principal repayment is not fixed) and for which EBITDA is not available, negative or de minimis are not included in the calculations.

Middle-Market Portfolio Net Leverage reflects the simple average net leverage of each of PSEC’s middle-market loan portfolio investments. The net leverage for each such investment is calculated based on PSEC’s loan investment in the capital structure of the portfolio company, with a maximum limit of 10.0x, and adjusted EBITDA. This calculation excludes debt subordinate to PSEC’s position within the capital structure because PSEC’s exposure to interest payment and principal repayment risk is limited beyond that point. The calculation does not exceed 10.0x adjusted EBITDA for any individual investment because 10.0x captures the highest level of risk to PSEC.

Middle-Market Portfolio Cash Interest Coverage reflects the simple average cash interest coverage of each of PSEC’s middle-market loan portfolio investments. The cash interest coverage for each middle-market loan portfolio investment is calculated based on the portfolio company’s cash interest and adjusted EBITDA.

Middle-Market Portfolio Net Leverage and Middle-Market Portfolio Cash Interest Coverage generally indicates a portfolio company’s ability to make interest payments and repay principal. Adjusted EBITDA provides PSEC with insight into profitability and scale of the portfolio companies within PSEC's middle-market loan portfolio.

These calculations include addbacks and adjustments that are often negotiated and documented in the applicable investment documents, including but not limited to transaction costs, share-based compensation, management fees, foreign currency translation adjustments, and nonrecurring transaction expenses. Consumer finance companies are adjusted to treat third-party receivables financing as a cost of goods sold (rather than financing) because consumer finance companies typically rely on such financing to fund their lending activities.

Middle-Market Portfolio Net Leverage and Middle-Market Portfolio Cash Interest Coverage assist PSEC in assessing the likelihood that PSEC will timely receive interest and principal payments. However, these calculations are not meant to substitute for an analysis of PSEC’s underlying portfolio company debt investments, but to supplement such analysis.

About Prospect Capital Corporation

Prospect is a business development company that primarily lends to and invests in middle market privately-held companies. Prospect’s investment objective is to generate both current income and long-term capital appreciation.

Prospect has elected to be treated as a business development company under the Investment Company Act of 1940. Prospect has elected to be treated as a regulated investment company under the Internal Revenue Code of 1986.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, whose safe harbor for forward-looking statements does not apply to business development companies. Any such statements, other than statements of historical fact, are highly likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under our control, and that we may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from any forward-looking statements. Such statements speak only as of the time when made, and we undertake no obligation to update any such statement now or in the future.

For additional information, contact:

Grier Eliasek, President and Chief Operating Officer
grier@prospectcap.com
Telephone (212) 448-0702