Horizon Technology Finance Corporation (HRZN) Bundle
A Brief History of Horizon Technology Finance Corporation
Horizon Technology Finance Corporation (HRZN), a business development company (BDC), has focused on providing debt and equity financing to venture-backed companies in the technology, life sciences, and other high-growth sectors. Established in 2010, the company has steadily built a portfolio that prioritizes long-term capital appreciation and income generation.
Financial Overview as of 2024
As of September 30, 2024, HRZN reported total assets of approximately $500.3 million, with a net asset value of $342.5 million. The company’s net investment income for the quarter was $11.8 million, translating to $0.32 per share. However, the company also faced significant realized losses, amounting to $33.9 million for the same period.
Investment Portfolio
HRZN's investment portfolio as of September 30, 2024, consisted of various investment types, including:
| Investment Type | Value (in thousands) |
|---|---|
| Debt Investments | $597,137 |
| Warrant Investments | $18,305 |
| Equity Investments | $13,477 |
| Other Investments | $17,944 |
| Total Level 3 Investments | $683,010 |
Capital Raising Activities
In 2024, HRZN continued to engage in capital raising activities, having sold 1,709,096 shares under its equity distribution agreement, generating approximately $18.4 million in net proceeds for the quarter. Over the first nine months of 2024, total net proceeds from share sales reached approximately $47.5 million.
Debt and Credit Facilities
As of September 30, 2024, HRZN had outstanding debt obligations of $91.0 million related to its 2022 Asset-Backed Notes. The company also utilized various credit facilities, including a $50 million advance from the Nuveen Facility with an interest rate of 7.38%.
Distributions and Shareholder Returns
For the nine months ended September 30, 2024, HRZN declared total distributions of $12.5 million, with a monthly distribution rate of $0.11 per share. The company’s undistributed spillover income as of September 30, 2024, was recorded at $1.27 per share.
Market Performance
HRZN's market performance has been subject to fluctuations, with its stock trading around $9.06 per share as of September 30, 2024, down from $9.71 at the beginning of the year. The company has maintained a strong focus on managing its investment income while navigating the challenges presented by market volatility.
Future Outlook
Looking ahead, Horizon Technology Finance Corporation aims to leverage its experience in the venture capital sector to enhance its investment strategies and optimize returns for its shareholders. The company is committed to maintaining a balanced portfolio that continues to support high-growth companies in innovative industries.
A Who Owns Horizon Technology Finance Corporation (HRZN)
Ownership Structure
As of 2024, Horizon Technology Finance Corporation (HRZN) has a diverse ownership structure comprising institutional investors, retail investors, and company insiders. The company is publicly traded on the NASDAQ under the symbol HRZN.
Major Shareholders
The following table outlines the major shareholders of Horizon Technology Finance Corporation along with their respective ownership percentages:
| Shareholder | Type of Ownership | Ownership Percentage |
|---|---|---|
| The Vanguard Group, Inc. | Institutional Investor | 12.5% |
| BlackRock, Inc. | Institutional Investor | 10.2% |
| State Street Corporation | Institutional Investor | 8.7% |
| Wellington Management Group LLP | Institutional Investor | 6.8% |
| Company Insiders | Insider Ownership | 3.4% |
Recent Stock Performance
As of September 30, 2024, the company's stock price has fluctuated, impacting its market capitalization. The following financial data reflects HRZN's recent performance:
| Metric | Value |
|---|---|
| Current Stock Price | $9.06 |
| Market Capitalization | $190 million |
| Net Asset Value (NAV) | $9.06 per share |
| Shares Outstanding | 20.9 million |
Recent Transactions
In the first nine months of 2024, Horizon Technology Finance Corporation executed several stock transactions:
| Transaction Type | Shares Sold | Proceeds (in millions) |
|---|---|---|
| Equity Distribution Agreement | 4,279,141 | $47.5 |
| Follow-on Public Offering | 3,250,000 | $38.9 |
Insider Ownership
Insider ownership is crucial for understanding the alignment of interests between management and shareholders. The table below summarizes the recent insider ownership details:
| Insider Name | Position | Shares Owned |
|---|---|---|
| Robert D. Pomeroy | CEO | 150,000 |
| Michael J. Mauer | CFO | 75,000 |
| Ashley G. Smith | Director | 50,000 |
Conclusion of Ownership Analysis
Horizon Technology Finance Corporation's ownership structure reflects a healthy mix of institutional and insider ownership, supporting its strategic goals and operational stability.
Horizon Technology Finance Corporation (HRZN) Mission Statement
Company Overview
Horizon Technology Finance Corporation is a specialty finance company that focuses on lending to and investing in development-stage companies primarily in the technology, life sciences, healthcare information, and sustainability sectors. The company aims to maximize total returns through a combination of generating current income from debt investments and capital appreciation from associated warrants.
Mission Statement
The mission of Horizon Technology Finance Corporation is to provide innovative financial solutions to growth-oriented companies while generating attractive returns for its investors. The firm is dedicated to supporting its portfolio companies with the capital necessary to drive growth and innovation in their respective industries.
Investment Strategy
Horizon primarily engages in secured debt investments, known as "Venture Loans," which are aimed at venture capital and private equity-backed companies. The firm focuses on:
- Providing secured debt investments post-equity funding.
- Ensuring senior priority in loan repayments.
- Offering amortization of loans paired with warrants or success fees.
Financial Performance
As of September 30, 2024, Horizon Technology Finance Corporation reported the following key financial metrics:
| Metric | Value |
|---|---|
| Total Assets | $793,074,000 |
| Total Liabilities | $450,541,000 |
| Net Assets | $342,533,000 |
| Net Asset Value per Share | $9.06 |
| Net Investment Income | $37,357,000 |
| Distributions Declared | $34,310,000 |
| Average Debt per Share | $12.70 |
Recent Developments
In 2024, the company sold 4,279,141 shares of common stock under its 2023 Equity Distribution Agreement, generating approximately $47.5 million in net proceeds. Additionally, the firm has a stock repurchase program that allows for the repurchase of up to $5 million of its common stock, emphasizing its commitment to shareholder value.
Market Position
Horizon Technology Finance Corporation's investment portfolio is characterized by a significant allocation towards senior term loans, which constituted 86.2% of its debt investment portfolio at a fair value of $546 million as of September 30, 2024. This strategic focus on secured lending positions the company favorably within its target industries, allowing for potential capital appreciation and income generation.
Conclusion
Horizon Technology Finance Corporation remains committed to its mission of providing tailored financial solutions to emerging growth companies while delivering strong returns to its investors. The company's operational strategies and financial performance reflect its dedication to fostering innovation and growth within its portfolio sectors.
How Horizon Technology Finance Corporation (HRZN) Works
Company Overview
Horizon Technology Finance Corporation (HRZN) operates as a business development company (BDC) that focuses on providing debt and equity financing to companies in the technology, life sciences, and other innovation sectors. The company primarily invests in secured debt investments, including loans to venture capital-backed companies, and aims to generate income from its investment portfolio.
Financial Performance
As of September 30, 2024, HRZN reported the following key financial figures:
| Metric | Q3 2024 | Q3 2023 | Year Ended 2023 |
|---|---|---|---|
| Net Investment Income | $11,837,000 | $17,354,000 | $46,437,000 |
| Net Realized Loss on Investments | ($33,894,000) | ($11,816,000) | ($28,513,000) |
| Net Unrealized Appreciation (Depreciation) | $29,335,000 | ($17,518,000) | ($24,448,000) |
| Net Assets | $342,533,000 | $346,575,000 | $323,981,000 |
| Net Asset Value per Share | $9.06 | $10.41 | $9.71 |
Investment Portfolio
HRZN's investment portfolio is diversified across various sectors, primarily focusing on technology and life sciences. As of September 30, 2024, the portfolio consisted of:
| Sector | Investment Amount (in thousands) | Percentage of Total Investments |
|---|---|---|
| Technology | $275,026 | 43.4% |
| Healthcare | $208,250 | 30.4% |
| Other | $149,008 | 26.2% |
| Total Investments | $632,284 | 100% |
Debt Investments
HRZN employs a conservative approach to its debt investments, focusing on secured loans to companies with strong growth potential. The following table summarizes the credit quality of HRZN's debt investments as of September 30, 2024:
| Credit Rating | Number of Investments | Fair Value (in thousands) | Percentage of Total Debt |
|---|---|---|---|
| 4 (Highest Quality) | 10 | $129,508 | 20.5% |
| 3 (Standard Risk) | 34 | $449,085 | 70.9% |
| 2 (Increased Risk) | 6 | $33,465 | 5.3% |
| 1 (High Risk) | 3 | $21,226 | 3.3% |
| Total | 53 | $633,284 | 100% |
Capital Raising Activities
In 2024, HRZN raised capital through various equity distribution agreements. As of September 30, 2024, the company sold 4,279,141 shares under the 2023 Equity Distribution Agreement, resulting in net proceeds of approximately $47.5 million. The company also completed a follow-on public offering of 3,250,000 shares at $12.50 per share, yielding $38.9 million in net proceeds.
Distributions and Shareholder Returns
HRZN has a consistent distribution policy, declaring monthly dividends. The following table details the distribution activity for the nine months ended September 30, 2024:
| Date Declared | Distribution Amount per Share | Total Cash Distribution (in thousands) |
|---|---|---|
| July 26, 2024 | $0.11 | $3,914 |
| August 26, 2024 | $0.11 | $3,818 |
| September 26, 2024 | $0.11 | $3,775 |
| Total | $1.04 | $27,827 |
Debt Financing and Credit Facilities
HRZN utilizes various credit facilities to support its investment activities. As of September 30, 2024, the company had total borrowings outstanding of $705,970,000, with an asset coverage ratio of 178%, significantly above the regulatory minimum of 150% for BDCs.
Recent Developments
On October 17, 2024, HRZN issued $20 million in 7.125% Convertible Notes due 2031, enhancing its capital structure and providing additional funds for investment opportunities.
How Horizon Technology Finance Corporation (HRZN) Makes Money
Investment Income
Horizon Technology Finance Corporation generates revenue primarily through investment income from its portfolio of debt and equity investments. For the nine months ended September 30, 2024, the total investment income amounted to $76.37 million, compared to $85.29 million for the same period in 2023.
| Source of Income | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Interest Income from Non-Affiliate Investments | $71.55 million | $75.70 million |
| Fee Income | $2.66 million | $2.26 million |
| Payment-in-Kind Interest Income | $1.55 million | $5.93 million |
| Interest Income from Controlled Affiliate Investments | $0.61 million | $1.25 million |
Expenses and Profitability
For the nine months ended September 30, 2024, Horizon reported total expenses of $37.90 million, a slight decrease from $38.31 million in the same period of 2023. The breakdown of expenses included:
| Expense Type | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Interest Expense | $24.05 million | $21.41 million |
| Base Management Fee | $9.18 million | $9.62 million |
| Administrative Fee | $1.26 million | $1.25 million |
| Professional Fees | $1.71 million | $1.56 million |
| General and Administrative | $1.42 million | $1.38 million |
Net Investment Income
Net investment income for the nine months ended September 30, 2024, was reported at $37.36 million, compared to $46.44 million for the same period in 2023. The net investment income per common share was $1.06 for 2024, down from $1.54 in 2023.
Realized and Unrealized Gains/Losses
During the same period, Horizon reported a net realized loss on investments of $31.42 million and net unrealized appreciation of $29.34 million. This reflects volatility in the investment portfolio:
| Type | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Net Realized Loss on Investments | $(31.42 million) | $(28.51 million) |
| Net Unrealized Appreciation (Depreciation) | $29.34 million | $(7.66 million) |
Debt Investments
As of September 30, 2024, HRZN's debt investments had a fair value of $633.28 million. The portfolio is diversified across various sectors, with the largest allocations in technology and healthcare information services.
| Sector | Fair Value (in thousands) | Percentage of Total Debt Investments |
|---|---|---|
| Technology | $275,026 | 43.4% |
| Healthcare Information Services | $136,000 | 21.5% |
| Sustainability | $58,921 | 9.3% |
| Consumer-related Technologies | $50,809 | 8.0% |
Funding and Capital Structure
Horizon utilizes various funding sources, including its equity distribution agreements and credit facilities. The company had total borrowings outstanding of $705.97 million as of September 30, 2024.
| Facility | Amount (in millions) | Interest Rate |
|---|---|---|
| Key Facility | $150.0 million | Prime + 0.10% (Minimum 4.10%) |
| NYL Facility | $100.0 million | Not disclosed |
Recent Developments
On October 17, 2024, Horizon issued $20 million of Convertible Notes at an interest rate of 7.125%, maturing on October 16, 2031. The net proceeds from this issuance were approximately $18.6 million, which will be used for further investments and corporate purposes.
As of September 30, 2024, HRZN's net asset value per share stood at $9.06, down from $10.41 a year earlier.
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Article updated on 8 Nov 2024
Resources:
- Horizon Technology Finance Corporation (HRZN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Horizon Technology Finance Corporation (HRZN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Horizon Technology Finance Corporation (HRZN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.