Gladstone Investment reported higher net asset value and a return to positive operating results in its fiscal second quarter ended Sept. 30, 2026. Net investment income fell sharply from the prior quarter, however, as investment income declined and expenses rose, including an accounting accrual for a capital-gains incentive fee.
The business development company invested $156.5 million during the quarter and ended September with a larger portfolio and more portfolio companies. Its $0.24-per-share cash distribution from investment income was unchanged.
Quarterly results
- Total investment income was $24.2 million, down 14.8% from $28.4 million in the quarter ended June 30.
- Net expenses rose to $19.3 million from $12.4 million. Gladstone said the September-quarter figure included a $2.4 million accrual for a capital-gains-based incentive fee. In the June quarter, it reversed a $5.6 million accrual for the same type of fee. The company said these amounts were recorded under accounting rules but were not contractually due for the respective periods.
- Net investment income was $4.8 million, or $0.12 per weighted-average share, compared with $15.9 million, or $0.40 per share, in the prior quarter. The company also reported adjusted net investment income of $0.18 per share, down from $0.26.
- Net unrealized appreciation was $12.2 million, compared with $18.8 million of net unrealized depreciation in the prior quarter. Gladstone reported no net realized gain or loss, versus a $9 million realized loss in June.
- The combined effect was a $17.1 million increase in net assets from operations, or $0.43 per share. In the prior quarter, operations reduced net assets by $11.9 million, or $0.30 per share.
- The cash distribution from net investment income remained at $0.24 per common share. No distribution from realized gains was reported in either quarter.
- The weighted-average yield on interest-bearing investments was 13.0%, compared with 12.9% in the prior quarter.
Portfolio and net asset value
- Gladstone invested $156.5 million during the quarter and received $19.9 million from repayments and sales or recapitalizations of investments.
- At Sept. 30, investments had a fair value of $1.43 billion, up 11.6% from $1.28 billion at June 30. The portfolio included 31 companies, compared with 29.
- Fair value was 121.1% of investment cost, down from 122.7% at the end of June.
- Net assets rose 1.2% to $654.3 million. Net asset value increased to $16.43 per share from $16.24.
- Total distributable earnings were $167.6 million, or $4.21 per share, up from $160.4 million, or $4.03 per share.
- Estimated spillover earnings—income available from prior periods—were $19.9 million, or $0.50 per share, compared with $22.5 million, or $0.56 per share.
The reported decline in net investment income per share came alongside an improvement in unrealized investment values and positive operating results overall. The quarter’s incentive-fee accruals also make the comparison in reported expenses and net investment income less direct: the September quarter included an accrual, while the June quarter included a reversal.