WhiteHorse Finance Reports Lower Q1 Income Amid Strategic Shareholder Moves

NEW YORK, NY – May 07, 2026 – WhiteHorse Finance, Inc. (Nasdaq: WHF) announced its first-quarter financial results today, revealing a period of strategic navigation through challenging credit markets. While the business development company (BDC) reported a decrease in net investment income and net asset value, it simultaneously underscored a commitment to shareholder returns by maintaining its quarterly distribution, executing value-accretive share repurchases, and benefiting from a voluntary fee waiver by its adviser.

The company posted a net investment income of $0.253 per share for the quarter ended March 31, 2026, a 12% decline from the $0.287 per share reported in the fourth quarter of 2025. Despite this, the firm’s board of directors declared a quarterly distribution of $0.25 per share, effectively covering the dividend with its net investment income. The distribution is payable on July 6, 2026, to stockholders of record as of May 21, 2026.

Navigating Financial Headwinds

A closer look at the financials reveals the pressures facing the firm. Total investment income for the first quarter was $15.9 million, down 8.5% from the previous quarter and a more significant 15.6% year-over-year from $18.8 million in the first quarter of 2025. This decline contributed to a net decrease in net assets from operations of approximately $0.7 million.

The company’s net asset value (NAV) per share also saw a modest decline, settling at $11.47 as of March 31, 2026, down 1.8% from $11.68 at the end of 2025. This trend reflects a broader pattern, with the NAV per share having decreased from a high of $14.20 in March 2023.

CEO Stuart Aronson addressed the results in the company’s announcement, noting that they “reflected anticipated portfolio markdowns.” Research into the portfolio shows these were driven by unrealized losses in specific investments, including Camarillo Fitness Holdings, LLC, and Patagonia Holdco LLC. Furthermore, the company’s investment in The Kyjen Company, LLC, which operates as Outward Hound, was placed on non-accrual status during the quarter, impacting the portfolio's overall yield. The weighted average effective yield on income-producing debt investments dipped to 10.8% from 11.0% in the prior quarter.

A Proactive Stance on Shareholder Value

Despite the challenging metrics, WhiteHorse Finance management emphasized a series of proactive measures designed to protect and enhance shareholder value. “During the first quarter, we continued to execute on the priorities we outlined last quarter, including actively managing previously identified credit situations, maintaining discipline in new originations, and repurchasing shares at a significant discount to NAV,” Aronson stated.

A key part of this strategy was the company's share repurchase program. During the first quarter, these buybacks were accretive to NAV by approximately $0.08 per share. This follows a significant repurchase of 1.0 million shares in the fourth quarter of 2025, which added $0.18 per share to the NAV. By buying back its own stock at a price well below its book value, the company effectively increases the value for remaining shareholders.

Reinforcing this shareholder-friendly approach, the company’s adviser, H.I.G. WhiteHorse Advisers, LLC, voluntarily agreed to reduce its incentive fee on net investment income for the upcoming second quarter. The fee will be lowered from its stated 20.00% to 17.50%, a move that directly reduces company expenses and boosts the bottom line available to investors. A similar waiver in the fourth quarter of 2025 resulted in a $0.2 million benefit, providing a precedent for the expected positive impact.

Portfolio Repositioning and Market Outlook

The first quarter saw WhiteHorse Finance adopt a more conservative and selective investment posture. The company's portfolio activity was characterized by a net portfolio runoff, with proceeds from sales and repayments totaling approximately $38.0 million, significantly exceeding the $25.4 million in new and add-on investments. The total fair value of the investment portfolio decreased to $543.0 million from $578.6 million in the prior quarter.

As of March 31, 2026, the portfolio consisted of 128 positions across 65 companies, with a heavy concentration in first-lien secured loans, which comprise nearly 73% of the portfolio. This defensive positioning, coupled with the fact that almost all loans are variable-rate with interest rate floors, provides some protection in a shifting economic environment.

Aronson noted that while the majority of the portfolio remains stable, the company is focused on “preserving liquidity, managing risk, and investing selectively.” This cautious stance is reflected in the market valuation of WhiteHorse Finance, which trades at a significant discount to its NAV compared to many of its BDC peers. This valuation suggests market skepticism about NAV stability but may also present an opportunity if the company’s strategic initiatives prove successful.

The company’s leadership sees the current environment as a double-edged sword. While acknowledging fewer high-quality opportunities compared to a year ago, Aronson has previously commented that the market for new deals has become more conservative in pricing and structure, making it a more attractive environment for disciplined lenders. This disciplined approach is aimed at positioning the portfolio for improved performance over the long term, even as it navigates the immediate pressures of the current credit cycle.