Gladstone Investment’s Adjusted Net Income Falls 30.8% to $0.18 per Share
Key Facts
Gladstone Investment reported on November 9 results for its fiscal second quarter ended September 30, 2026, recording adjusted net investment income of $7.292 million, or $0.18 per share. Net investment income under generally accepted accounting principles was $4.849 million, or $0.12 per share. The figures represent two different measures of the quarter’s result: adjusted income was higher than reported GAAP net investment income. Compared with the quarter ended June 30, net investment income fell 69.6%, and net investment income per share declined 70.0%. Adjusted net investment income per share fell 30.8% from $0.26 in the previous quarter.
Investment income was $24.163 million in the quarter ended September 30, down 14.8% from the previous quarter. Meanwhile, net expenses rose to $19.314 million, an increase of 55.4% quarter over quarter. The company said the decline in investment income was mainly related to a $5.6 million decrease in success fee income. A $1.4 million increase in interest income compared with the previous quarter partly offset that effect. The company attributed the increase in expenses mainly to an $8.0 million rise in the accrual for incentive fees on capital gains, along with a $1 million increase in interest expense.
Despite the decline in income during the quarter, net asset value per share rose to $16.43 on September 30, compared with $16.24 on June 30. The company attributed the increase mainly to $12.2 million in unrealized appreciation of investments. This reflects a different movement in the quarter’s income measure and the per-share value of assets over the period. The fair value of the company’s investments was $1.431 billion at quarter-end. These investments were spread across 31 portfolio companies.
The company invested $156.493 million during the quarter ended September 30. The weighted average yield on interest-bearing investments rose to 13.0%, from 12.9% in the previous quarter, an increase of 0.1 percentage points. In July, the company invested $56.4 million in DHE Computer Systems Acquisition. The investment included $40.3 million in first-lien secured debt and $16.1 million in preferred equity. The company had $421.05 million in notes payable on September 30, while outstanding borrowings under its credit facility reached $299.8 million.
Gladstone Investment maintained its quarterly cash distribution at $0.24 per share, paid at $0.08 per month in July, August and September. This came in the same quarter in which adjusted net investment income was $0.18 per share, compared with GAAP net investment income of $0.12 per share. The company set November 19 as the record date for the monthly distribution of $0.08 per share, payable on November 30. The company also received $54.6 million in October when its investment in SFEG debt was repaid at par. It also received $0.5 million in success fee income.
In November, the company invested $56.1 million in McFarlane Toys, as part of a new investment in a portfolio company. The financing included $41.8 million in first-lien secured debt and $14.3 million in preferred equity. The company was scheduled to hold its earnings conference call on November 10, 2026, at 8:30 a.m. Eastern time. It said a replay of the call would be available through November 17. GAIN shares closed at $14.86 on November 6, 2026.