Runway Growth Finance Corp. Provides Second Quarter 2024 Portfolio Update

Rhea-AI Summary

Runway Growth Finance Corp. (Nasdaq: RWAY) announced its Q2 2024 portfolio update, detailing significant investment activities. The company completed two investments totaling $75.5 million in new portfolio companies, including a $58.4 million investment in a marketing technology firm and a $17.1 million investment in Onward Medical N.V. Additionally, a senior secured term loan to Turning Tech Intermediate, Inc. was repaid in full, amounting to $25.3 million. Runway Growth maintains a disciplined underwriting approach and a strong pipeline for future investments. As of June 30, 2024, the portfolio includes 47 debt investments and 83 equity investments, spanning technology, life sciences, and consumer services sectors.

Positive

• Completed two new investments totaling $75.5 million in Q2 2024.
• Secured a $58.4 million investment in a marketing technology enterprise SaaS platform.
• Funded $17.1 million to Onward Medical N.V. for spinal cord stimulation therapies.
• Received full repayment of a $25.3 million senior secured term loan from Turning Tech Intermediate, Inc.
• Maintained a disciplined underwriting and credit quality approach.
• Strong pipeline of attractive investments for the second half of 2024.

Negative

• None.

Financial Analyst

Runway Growth Finance Corp.'s recent update reveals strategic moves in expanding its investment portfolio. The company has funded $75.5 million in new loans, showcasing confidence in its underwriting discipline. This move is significant in the context of the current high interest rate environment, where securing non-dilutive capital is increasingly appealing to companies.

From a financial perspective, this demonstrates Runway Growth's ability to deploy capital effectively while maintaining a low leverage ratio. This is important for investors as it indicates a balanced risk approach. Moreover, the prepayment of $25.3 million by Echo 360, Inc. is a positive liquidity event, potentially freeing up capital for future investments.

Investors should note the focus on sectors with high growth potential—technology, life sciences and consumer services. This targeted strategy can yield significant returns but also carries sector-specific risks. As the company adds new borrowers, the credit quality and performance of these investments will be critical in maintaining investor confidence.

Tech Expert

The investment in a marketing technology company leveraging an enterprise SaaS platform for customer engagement is noteworthy. SaaS platforms offer scalability and recurring revenue models, which can be attractive in the current market. This investment aligns with the trend towards digital transformation and enhanced customer experience in mobile apps, indicating a strategic placement in a growth-oriented sector.

For retail investors, understanding the SaaS business model is key. These companies often have high upfront costs but benefit from predictable revenue streams over time. The focus on customer engagement further highlights the importance of user retention and satisfaction, important metrics for long-term success.

Medical Research Analyst

The funding of a senior secured term loan to Onward Medical N.V. is another strategic move, focusing on innovative spinal cord stimulation therapies. This investment in the medical technology sector, particularly in a niche segment like spinal cord injury treatment, suggests a targeted approach to high-impact health solutions. The potential social impact, combined with the financial return prospects, makes this investment notable.

For retail investors, the medical technology field can offer substantial returns, albeit with higher risks due to the dependency on regulatory approvals and clinical trial results. Understanding the innovation pipeline and market demand for such therapies can provide insights into the long-term viability of these investments.

• Completed Two Investments in New Portfolio Companies Representing $75.5 Million in Funded Loans
  

MENLO PARK, Calif., July 11, 2024 (GLOBE NEWSWIRE) -- Runway Growth Finance Corp. (Nasdaq: RWAY) (“Runway Growth” or the “Company”), a leading provider of flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity, today provided an operational and portfolio update for the second quarter ended June 30, 2024.

“Runway Growth delivered portfolio expansion in the second quarter while maintaining our disciplined approach to underwriting and credit quality,” said David Spreng, Founder and CEO of Runway Growth. “As we evaluate the current late- and growth-stage market, we are confident that more high-quality companies are seeking non-dilutive capital to advance their strategic roadmaps. Our borrowers continue to generate strong performance in the existing operating environment, and we look forward to partnering with additional companies. We have a strong, actionable pipeline of attractive investments and believe we are well-positioned to execute on the right transactions in the second half of 2024.”

Originations
In the second quarter of 2024, Runway Growth funded two investments in new portfolio companies. These include:

• Completion of a $58.4 million investment to a new portfolio company in the marketing technology industry that is an enterprise SaaS platform focused on customer engagement for mobile apps, funding $58.4 million at transaction close; and
• Completion of a new $56.1 million senior secured term loan commitment to Onward Medical N.V. (Euronext: ONWD) (“Onward”), funding $17.1 million at close. Onward is a medical technology company creating innovative spinal cord stimulation therapies to restore movement, function, and independence in people with spinal cord injuries.

Liquidity Events
During the second quarter ended June 30, 2024, Runway Growth experienced one prepayment totaling $25.3 million and scheduled principal amortization of $1.3 million. The prepayment included:

• Full principal repayment of the Company’s senior secured term loan to Turning Tech Intermediate, Inc. (DBA Echo 360, Inc.) of $25.3 million.
  

Portfolio Construction and Management
Runway Growth is a credit-first organization, carefully structured to focus on what it believes to be the highest quality, late-stage companies in the venture debt market. The Company continues to uphold heightened investment standards throughout higher for longer interest rates with disciplined underwriting and diligent monitoring of its portfolio. Runway Growth is positioned as a preferred lender in the venture debt space, supporting and working closely with companies to help them reach their full growth potential. Since inception, the Company has focused on the fastest growing sectors of the economy, including life sciences, technology and select consumer services and products industries. Runway Growth’s low leverage ratio and ample dry powder enable it to deploy capital across its core sectors in a manner that is fully accretive.

As of June 30, 2024, the Runway Growth portfolio included 47 debt investments to 31 portfolio companies and 83 equity investments in 52 portfolio companies, including 28 portfolio companies where Runway Growth holds both a debt and equity investment. Investments were comprised of late and growth-stage businesses in the technology, life sciences and consumer services and products industries. Runway Growth’s normal business operations include frequent communication with portfolio companies.

About Runway Growth Finance Corp.
Runway Growth is a growing specialty finance company focused on providing flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity. Runway Growth is a closed-end investment fund that has elected to be regulated as a business development company under the Investment Company Act of 1940. Runway Growth is externally managed by Runway Growth Capital LLC, an established registered investment advisor formed in 2015 and led by industry veteran David Spreng. For more information, please visit www.runwaygrowth.com.

Forward-Looking Statements
Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Runway Growth’s filings with the Securities and Exchange Commission. Runway Growth undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

IR Contacts:
Stefan Norbom, Prosek Partners, snorbom@prosek.com
Thomas B. Raterman, Chief Financial Officer and Chief Operating Officer, tr@runwaygrowth.com

FAQ

What investments did Runway Growth Finance Corp. (RWAY) make in Q2 2024?

Runway Growth Finance Corp. invested $75.5 million in new portfolio companies in Q2 2024, including $58.4 million in a marketing technology firm and $17.1 million in Onward Medical N.V.

What was the total amount of new investments made by RWAY in Q2 2024?

In Q2 2024, RWAY made new investments totaling $75.5 million.

Which companies received investments from RWAY in Q2 2024?

RWAY invested in a marketing technology firm ($58.4 million) and Onward Medical N.V. ($17.1 million) in Q2 2024.

How much did RWAY receive from loan repayments in Q2 2024?

RWAY received $25.3 million from the full repayment of a senior secured term loan by Turning Tech Intermediate, Inc. in Q2 2024.

What is RWAY's investment strategy as of Q2 2024?

As of Q2 2024, RWAY maintains a disciplined underwriting and credit quality approach while focusing on high-quality, late-stage companies in sectors like technology, life sciences, and consumer services.

How many investments does RWAY hold as of June 30, 2024?

As of June 30, 2024, RWAY holds 47 debt investments and 83 equity investments in its portfolio.