Exhibit 99.1

Hercules Capital Reports Record Fourth Quarter and Full-Year 2018 Financial Results

Company Achieves Multiple Records for Total New Debt and Equity Commitments, Total Gross Fundings, Total Investment Income, Net Investment Income, Total Investment Assets and Total Debt Investments

Record FY2018 New Debt and Equity Commitments of $1.21 Billion, up 37.6% Year-over-Year

Record Net Portfolio Growth of $312.9 Million, leading to Record Total Debt Investments of $1.75 billion, at cost, an increase of 21.7% year-over-year

Received Stockholder Approval to Reduce Its Asset Coverage Requirement from 200% to 150%

Net Investment Income of $0.32 per Share provides 103% Coverage of Regular Dividend Distribution Payout

Record Undistributed Earnings Spillover of ~$30.7 million, or $0.32 Earnings per Share⁽¹⁾

Q4 2018 Financial Achievements and Highlights

Full-year ending December 31, 2018 Financial Highlights

Footnotes:

PALO ALTO, Calif., February 21, 2019 - Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or the “Company”), the largest and leading specialty financing provider to innovative venture growth stage companies backed by leading venture capital and select private equity firms, today announced its financial results for the fourth quarter and full-year ended December 31, 2018.

The Company announced that its Board of Directors has declared a fourth quarter cash distribution of $0.31 per share, respectively, that will be payable on March 11, 2019, to shareholders of record as of March 4, 2019.

“We capped off a record year with a strong finish in Q4 2018, setting multiple records for Total New Debt and Equity Commitments, Total Investment Income, Net Investment Income, Total Investment Assets and Total Debt Investments for the year, delivering record portfolio growth, and generating NII in excess of our dividend distribution payout while increasing our earnings spill-over for future potential dividend increases or supplemental dividend distributions,” stated Manuel A. Henriquez, chairman and chief executive officer of Hercules. “2018 truly showed the benefits of our scale and platform capabilities as we continue to leverage our industry-leading venture debt platform and market leadership position, which resulted in total debt and equity commitments of $249.4 million and total gross fundings $254.7 million in Q4, and ending the year with a record debt investment portfolio balance of $1.75 billion. Our healthy ecosystem continues to fuel our investment pipeline as venture capital fundraising and investment remained at record levels, while the IPO market exhibits ever-increasing signs of renewed optimism with many notable companies preparing for their IPO debuts in 1H2019. This includes two of our own portfolio companies that completed IPOs in February 2019, and five more that have filed for their respective IPO debuts. We remain very optimistic as we head into 2019, subject to existing market conditions remaining favorable.”

Henriquez continued, “Our balance sheet remains highly liquid and asset sensitive which positions Hercules to benefit from the recent increases in PRIME. Our debt investment portfolio continues to deliver strong core and effective yields while also benefiting from reduced early loan repayments in the quarter, allowing our debt investment portfolio to grow. We finished Q4 2018 with a strong liquidity position of $156.2 million, and our access to the capital markets keeps us well positioned to fund our expected loan portfolio growth throughout the year in 2019. We remain very active in the capital markets, having recently completed our fourth securitization raising an additional $250.0 million of capital to continue to fund our investment portfolio growth. This transaction caps off a remarkable year for Hercules in which we raised approximately $708.0 million of new debt and equity capital, expanding and diversifying our sources of capital and providing long-dated maturities to help support our growth and deliver increased earnings in 2019 and beyond.”

Henriquez concluded, “Finally, I am very pleased to welcome Seth Meyer, who will join our executive team as the new Chief Financial Officer on March 4, 2019. As we continue to set a path for organic growth and potential future expansion of our product offerings to our innovative companies, Seth will be in integral part of our senior management team, as we focus on the growth opportunities before us and look to achieve our long-term growth objectives.”

Q4 2018 Review and Operating Results

Debt Investment Portfolio

Hercules achieved another strong quarter of new commitments, totaling $249.4 million, and gross fundings of $254.7 million.

During the quarter, Hercules realized early loan repayments of $63.9 million, which along with normal scheduled amortization of $23.2 million, resulted in total debt repayments of $87.1 million.

The strong new debt investment origination and funding activities lead to net debt investment portfolio growth of $144.9 million during the fourth quarter, on a cost basis.

The Company’s total investment portfolio, (at cost and fair value) by category, quarter-over-quarter and year-over-year are highlighted below:

Total Investment Portfolio: Q3 2018 to Q4 2018

Debt Investment Portfolio Balances by Quarter

As of December 31, 2018, 85.3% of the Company’s debt investments were in a senior secured first lien position.

Effective Portfolio Yield and Growing Core Portfolio Yield (“Core Yield”)

Effective yields on Hercules’ debt investment portfolio were 13.5% during Q4 2018, the same level as Q3 2018. The Company realized $63.9 million of early loan repayments in Q4 2018 compared to $64.9 million in Q3 2018, or a decrease of 1.5%. Effective portfolio yields generally include the effects of fees and income accelerations attributed to early loan repayments, and other one-time events. Effective yields are materially impacted by elevated levels of early loan repayments and derived by dividing total investment income by the weighted average earning investment portfolio assets outstanding during the quarter, which excludes non-interest earning assets such as warrants and equity investments.

Core yields, a non-GAAP measure, were 12.9% during Q4 2018, exceeding the upper end of the Company’s 2018 expected range of 11.5% to 12.5%, and above the 12.7% level achieved in Q3 2018. Hercules defines core yield as yields that generally exclude any benefit from income related to early repayments attributed to the acceleration of unamortized income and prepayment fees and includes income from expired commitments.

Income Statement 

Total investment income increased to $56.9 million for Q4 2018, compared to $50.2 million in Q4 2017, an increase of 13.3% year-over-year. The increase is primarily attributable to a higher average debt investment balance between periods along with an increase in the core yield from 12.5% in Q4 2017 to 12.9% in Q4 2018.

Non-interest and fee expenses increased to $14.4 million in Q4 2018 versus $12.6 million for Q4 2017. The increase was primarily due to an increase in G&A and stock-based compensation expenses, offset by lower variable compensation expenses.

Interest expense and fees were $11.9 million in Q4 2018, compared to $13.0 million in Q4 2017. The decrease was due to a lower weighted average cost of borrowings comprised of interest and fees, of 5.3% in Q4 2018, a decrease from 6.4% in Q4 2017. The lower weighted average cost of borrowings resulted from the issuance of the 5.25% Notes due 2025 in April 2018, 6.25% Notes due 2033 in October 2018, and 4.605% fixed rate asset-backed notes due 2027 (the “2027 Asset-Backed Notes”) in November 2018, as well as increased average borrowing under our credit facilities.

NII – Net Investment Income

NII for Q4 2018 was $30.6 million, or $0.32 per share, based on 96.4 million basic weighted average shares outstanding, compared to $24.5 million, or $0.29 per share, based on 83.8 million basic weighted average shares outstanding in Q4 2017, an increase of 24.9% year-over-year. The increase is primarily attributable to a higher average debt investment balance between periods along with an increase in the core yield from 12.5% in Q4 2017 to 12.9% in Q4 2018.

DNOI - Distributable Net Operating Income

DNOI, a non-GAAP measure, for Q4 2018 was $33.9 million, or $0.35 per share, compared to $26.1 million, or $0.31 per share, in Q4 2017.

DNOI is a non-GAAP financial measure. The Company believes that DNOI provides useful information to investors and management because it measures Hercules’ operating performance, exclusive of employee stock compensation, which represents expense to the Company, but does not require settlement in cash. DNOI includes income from payment-in-kind, or “PIK”, and back-end fees that are generally not payable in cash on a regular basis, but rather at investment maturity. Hercules believes disclosing DNOI and the related per share measures are useful and appropriate supplements and not alternatives to GAAP measures for net operating income, net income, earnings per share and cash flows from operating activities.

Continued Credit Discipline and Strong Credit Performance

Hercules’ net cumulative realized gain/(loss) position, since its first origination activities in October 2004 through December 31, 2018, (including net loan, warrant and equity activity) on investments, totaled ($40.1) million, on a GAAP basis, spanning 15 years of investment activities.

When compared to total new debt investment commitments during the same period of over $8.5 billion, the total realized gain/(loss) since inception of ($40.1) million represents approximately 47 basis points “bps,” or 0.47%, of cumulative debt commitments, or an effective annualized loss rate of 3 bps, or 0.03%.

Realized Gains/(Losses)

During Q4 2018, Hercules had gross realized gains/(losses) of $(0.6) million primarily from gross realized gains of $1.4 million, offset by the liquidation, write-off or expiration of warrant and equity investments in seven (7) portfolio companies and a debt investment in one (1) portfolio company, of ($2.0) million.

Unrealized Appreciation/(Depreciation)

During Q4 2018, Hercules recorded $47.1 million of net unrealized depreciation primarily related to mark-to-market changes which were mainly driven by the volatility in the public markets in Q4 2018 which adversely impacted our public equity and warrant investments, as well as our private investments. The allocation was:

Portfolio Asset Quality

As of December 31, 2018, the weighted average grade of the debt investment portfolio remained level at 2.18, on a cost basis, compared to 2.23 as of September 30, 2018, based on a scale of 1 to 5, with 1 being the highest quality. Hercules’ policy is to generally adjust the credit grading down on its portfolio companies as they approach their expected need for additional growth equity capital to fund their respective operations for the next 9-14 months.

Additionally, Hercules may selectively downgrade portfolio companies, from time to time, if they are not meeting the Company’s financing criteria, underperforming relative to their respective business plans, or approaching an additional round of new equity capital investment. It is expected that venture growth stage companies typically require multiple additional rounds of equity capital, generally every 9-14 months, since they are not generating positive cash flows for their operations. Various companies in the Company’s portfolio will require additional rounds of funding from time to time to maintain their operations.

As of December 31, 2018, grading of the debt investment portfolio at fair value, excluding warrants and equity investments, was as follows:

Non-Accruals 

Non-accruals declined as a percentage of the overall investment portfolio in the fourth quarter of 2018. As of December 31, 2018, the Company had two (2) debt investments on non-accrual with a cumulative investment cost and fair value of approximately $2.7 million and $0.0 million, respectively, or 0.1% and 0.0% as a percentage of the Company’s total investment portfolio at cost and value, respectively.

Compared to September 30, 2018, the Company had two (2) debt investments on non-accrual with cumulative investment cost and fair value of approximately $2.8 million and $0.0 million, respectively, or 0.2% and 0.0% as a percentage of the total investment portfolio at cost and value, respectively.

Liquidity and Capital Resources

The Company ended Q4 2018 with $156.2 million in available liquidity, including $34.2 million in unrestricted cash and cash equivalents, and $122.0 million in available credit facilities, subject to existing terms and advance rates and regulatory and covenant requirements.

On November 1, 2018, the Company completed a term debt securitization in connection with which an affiliate of the Company made an offering of $200 million in aggregate principal amount of the 2027 Asset-Backed Notes. The 2027 Asset-Backed Notes were rated A(sf) by Kroll Bond Rating Agency, Inc. (“KBRA”). Interest on the 2027 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 4.605% per annum. The 2027 Asset-Backed Notes have a stated maturity of November 22, 2027.

On January 22, 2019, the Company completed a term debt securitization in connection with which an affiliate of the Company made an offering of $250 million in aggregate principal amount of fixed-rate asset-backed notes due 2028 (the “2028 Asset-Backed Notes”). The 2028 Asset-Backed Notes were rated A(sf) KBRA. Interest on the 2028 Asset-Backed Notes will be paid, to the extent of funds available, at a fixed rate of 4.703% per annum. The 2028 Asset-Backed Notes have a stated maturity of February 22, 2028.

On December 7, 2018, the Board of Directors approved a full redemption, in two equal transactions, of $83.5 million of the outstanding aggregate principal amount of the 2024 Notes. The 2024 Notes were fully redeemed on January 14, 2019 and February 4, 2019.

During Q4 2018, the Company sold 94,000 shares of common stock, which were issued under the equity ATM program, for total accumulated net proceeds of approximately $957,000, including $150,000 of offering expenses.

For the twelve months ended December 31, 2018, the Company sold 5.1 million shares of common stock under the equity ATM program for total accumulated net proceeds of approximately $63.3 million, including $1.5 million of offering expenses.

Bank Facilities

As of December 31, 2018, Hercules has two committed accordion credit facilities, one with Wells Fargo Capital Finance, part of Wells Fargo & Company (NYSE: WFC) (the “Wells Fargo Facility”), and another with Union Bank (the “Union Bank Facility”) for $75.0 million and $100.0 million, respectively. The Wells Fargo and Union Bank Facilities both include an uncommitted accordion feature that enables the Company to increase the existing facilities to a maximum value of $300.0 million and $200.0 million, respectively, or $500.0 million in aggregate. Pricing at December 31, 2018 under the Wells Fargo Facility and Union Bank Facility were both LIBOR+3.25%, and no floor, respectively. There were $39.8 million in outstanding borrowings under the Union Bank Facility and $13.1 million in outstanding borrowings under the Wells Fargo Facility, for a total of $52.9 million at December 31, 2018.

On January 11, 2019, the Company entered into the Seventh Amendment to the Wells Facility. Among others, the amendment amends certain key provisions of the Wells Facility to increase Wells Fargo Capital Finance’s commitments thereunder from $75.0 million to $125.0 million, reduces the current interest rate to LIBOR plus 3.00% with a natural floor of 3.00%, and extends the maturity date to January 2023. The advance rate was increased to 55% against eligible loans.

On February 20, 2019, the Company replaced its existing $100.0 million credit facility with MUFG Union Bank with a new credit facility under which City National, Umpqua Bank, Hitachi Capital America Corporation and Mutual of Omaha Bank, together with MUFG Union Bank, have committed a total of $200.0 million in credit capacity subject to borrowing base, leverage and other restrictions. The new credit facility also includes an uncommitted accordion feature of $100.0 million. The interest rate applicable to borrowings under the new credit facility has been reduced to LIBOR plus 2.70%. The new credit facility matures in February 2022, plus a 12-month amortization period. The advance rate under the new credit facility has been increased to 55% against eligible loans.

Leverage 

On December 6, 2018, the Company announced that its stockholders approved the proposal to reduce its asset coverage requirement from 200% to 150% at the Company's special stockholders meeting (“Special Meeting”) held on December 6, 2018. This reduction applies the modified asset coverage requirements as amended by the Small Business Credit Availability Act, which was passed into law on March 23, 2018. At the Special Meeting, a quorum was reached with stockholder’s voting 91.5% in favor of the proposal.

Hercules’ GAAP leverage ratio, including its SBA debentures, was 102.6%, as of December 31, 2018. Hercules’ regulatory leverage, or debt to equity ratio, excluding our Small Business Administration “SBA” debentures, was 87.0% and net regulatory leverage, a non-GAAP measure (excluding cash of approximately $34.2 million), was 83.4%, as of December 31, 2018. Hercules’ net leverage ratio, including its SBA debentures, was 99.0%, as of December 31, 2018.

Available Unfunded Commitments – Representing 7.1% of total assets

The Company’s unfunded commitments and contingencies consist primarily of unused commitments to extend credit in the form of loans to select portfolio companies. A portion of these unfunded contractual commitments are dependent upon the portfolio company reaching certain milestones in order to gain access to additional funding. Furthermore, our credit agreements contain customary lending provisions that allow us relief from funding obligations for previously made commitments. In addition, since a portion of these commitments may also expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements.

As of December 31, 2018, the Company had $139.0 million of available unfunded commitments at the request of the portfolio company and unencumbered by any milestones, including undrawn revolving facilities, representing 7.1% of Hercules’ total assets. This decreased from the previous quarter of $171.9 million of available unfunded commitments at the request of the portfolio company or 9.4% of Hercules’ total assets.

Existing Pipeline and Signed Term Sheets

After closing $249.4 million in new debt and equity commitments in Q4 2018, Hercules has pending commitments of $290.6 million in signed non-binding term sheets outstanding as of February 18, 2019. Since the close of Q4 2018 and as of February 18, 2019, Hercules closed new debt and equity commitments of $55.0 million to new and existing portfolio companies and funded $67.8 million.

Signed non-binding term sheets are subject to satisfactory completion of Hercules’ due diligence and final investment committee approval process as well as negotiations of definitive documentation with the prospective portfolio companies. These non-binding term sheets generally convert to contractual commitments in approximately 90 days from signing. It is important to note that not all signed non-binding term sheets are expected to close and do not necessarily represent future cash requirements or investments.

Net Asset Value

As of December 31, 2018, the Company’s net assets were $955.4 million, compared to $1.0 billion at the end of Q3 2018. NAV per share decreased 4.6% to $9.90 on 96.5 million outstanding shares of common stock as of December 31, 2018, compared to $10.38 on 96.8 million outstanding shares of common stock as of September 30, 2018. The decrease in NAV per share was primarily attributed to a change in unrealized depreciation during the quarter.

On December 17, 2018, the Board of Directors authorized a stock repurchase plan to acquire up to $25.0 million in the aggregate of Hercules’ common stock at prices that may be above or below net asset value, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The Company may repurchase shares of its common stock in the open market, including block purchases, at prices that may be above or below NAV as reported in the most recently published financial statements. Unless extended or terminated by its Board of Directors, Hercules expects the share repurchase program to be in effect until June 18, 2019, or until the approved dollar amount has been used to repurchase shares.

During the three months ended December 31, 2018, the Company repurchased 376,466 shares of common stock at an average price of $10.77 per share.

High Asset Sensitivity – Expected Increase in Prime Rate Will Benefit Hercules and Help Drive Future Earnings Growth

Hercules has purposely constructed an asset sensitive debt investment portfolio and has structured its debt borrowings for any eventual increases in market rates that may occur in the near future. With 97.3% of our debt investment portfolio being priced at floating interest rates as of December 31, 2018, with a Prime or LIBOR-based interest rate floor, coupled with 94.5% of our outstanding debt borrowings bearing fixed interest rates, this leads to higher net investment income to our shareholders.

Based on Hercules’ Consolidated Statement of Assets and Liabilities as of December 31, 2018, the following table shows the approximate annualized increase in components of net income resulting from operations of hypothetical base rate changes in interest rates, such as Prime Rate, assuming no changes in Hercules’ debt investments and borrowings. These estimates are subject to change due to the impact from active participation in the Company’s equity ATM program.

We expect each 25-bps increase in the Prime Rate to contribute approximately $3.9 million, or $0.04 per share, of net investment income annually.

Existing Equity and Warrant Portfolio – Potential Future Additional Returns to Shareholders

Equity Portfolio

Hercules held equity positions in 55 portfolio companies with a fair value of $120.2 million and a cost basis of $191.9 million as of December 31, 2018. On a fair value basis, 22.7% or $27.3 million is related to existing public equity positions, at December 31, 2018.

Warrant Portfolio

Hercules held warrant positions in 129 portfolio companies with a fair value of $26.7 million and a cost basis of $35.7 million as of December 31, 2018. On a fair value basis, 15.0% or 4.0 million is related to existing public warrant positions, at December 31, 2018.

Portfolio Company IPO and M&A Activity in Q4 2018

IPO Activity

As of February 18, 2019, Hercules held warrant and equity positions in seven (7) portfolio companies that had either completed their IPOs or filed Registration Statements in contemplation of a potential IPO, including:

There can be no assurances that companies that have yet to complete their IPOs will do so.

M&A Activity

Distributions

The Board of Directors declared a fourth quarter cash distribution of $0.31 per share. This distribution would represent the Company’s 54th consecutive distribution declaration since its IPO, bringing the total cumulative distribution declared to date to $15.28 per share. The following shows the key dates of our fourth quarter 2018 distribution payments:

Hercules' Board of Directors maintains a variable distribution policy with the objective of distributing four quarterly distributions in an amount that approximates 90% to 100% of the Company’s taxable quarterly income or potential annual income for a particular year. In addition, during the year, the Company’s Board of Directors may choose to pay additional supplemental distributions, so that the Company may distribute approximately all its annual taxable income in the year it was earned, or it can elect to maintain the option to spill over the excess taxable income into the coming year for future distribution payments.

The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of its distributions for a full year. Of the distributions declared during the quarter ended December 31, 2018, 100% were distributions derived from the Company’s current and accumulated earnings and profits. There can be no certainty to stockholders that this determination is representative of what the tax attributes of the Company’s 2019 distributions to stockholders will be.

Subsequent Events 

The table below summarizes our year-to-date closed and pending commitments as follows:

Notes:

Conference Call

Hercules has scheduled its fourth quarter and full-year 2018 financial results conference call for February 21, 2019 at 2:00 p.m. PT (5:00 p.m. ET). To listen to the call, please dial (877) 304-8957 (or (408) 427-3709 internationally) and reference Conference ID: 3787301 if asked, approximately 10 minutes prior to the start of the call. A taped replay will be made available approximately three hours after the conclusion of the call and will remain available for seven days. To access the replay, please dial (855) 859-2056 or (404) 537-3406 and enter the passcode 3787301.

About Hercules Capital, Inc.

Hercules Capital, Inc. (NYSE: HTGC) (“Hercules”) is the leading and largest specialty finance company focused on providing senior secured venture growth loans to high-growth, innovative venture capital-backed companies in a broad variety of technology, life sciences and sustainable and renewable technology industries. Since inception (December 2003), Hercules has committed more than $8.5 billion to over 450 companies and is the lender of choice for entrepreneurs and venture capital firms seeking growth capital financing. Companies interested in learning more about financing opportunities should contact info@htgc.com, or call 650.289.3060.

Hercules’ common stock trades on the New York Stock Exchange (NYSE) under the ticker symbol “HTGC.” In addition, Hercules has six outstanding bond issuances of:

Institutional Notes PAR $1000.00

Retail Notes (“Baby Bonds”) PAR $25.00

Convertible Notes

Securitization Notes

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act.

The information disclosed in this press release is made as of the date hereof and reflects Hercules’ most current assessment of its historical financial performance. Actual financial results filed with the SEC may differ from those contained herein due to timing delays between the date of this release and confirmation of final audit results. These forward-looking statements are not guarantees of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements including, without limitation, the risks, uncertainties, including the uncertainties surrounding the current market volatility, and other factors the Company identifies from time to time in its filings with the SEC. Although Hercules believes that the assumptions on which these forward-looking    statements are based are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained in this release are made as of the date hereof, and Hercules assumes no obligation to update the forward-looking statements for subsequent events.

Contact:

Michael Hara

Investor Relations and Corporate Communications

Hercules Capital, Inc.

650-433-5578

mhara@htgc.com

HERCULES CAPITAL, INC.

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

(dollars in thousands, except per share data)

HERCULES CAPITAL, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

HERCULES CAPITAL, INC.
NON GAAP FINANCIAL MEASURES 
(in thousands, except per share data)

Distributable Net Operating Income, “DNOI” represents net investment income as determined in accordance with U.S. generally accepted accounting principles, or GAAP, adjusted for amortization of employee restricted stock awards and stock options. Hercules views DNOI and the related per share measures as useful and appropriate supplements to net operating income, net income, earnings per share and cash flows from operating activities. DNOI is a non-GAAP financial measure. The Company believes that DNOI provides useful information to investors and management because it serves as an additional measure of Hercules’ operating performance exclusive of employee restricted stock amortization, which represents expenses of the Company but does not require settlement in cash. DNOI does include paid-in-kind, or PIK, interest and back end fee income which are generally not payable in cash on a regular basis, but rather at investment maturity or when declared. DNOI should not be considered as an alternative to net operating income, net income, earnings per share and cash flows from operating activities (each computed in accordance with GAAP). Instead, DNOI should be reviewed in connection with net operating income, net income (loss), earnings (loss) per share and cash flows from operating activities in Hercules’ consolidated financial statements, to help analyze how Hercules’ business is performing.

HERCULES CAPITAL, INC. 
NON GAAP FINANCIAL MEASURES 
(in thousands, except per share data)

Net leverage ratio is calculated by deducting the outstanding cash of $34.2 million and long-term SBA debentures of $149.0 million, at December 31, 2018 from total principal outstanding of $865.7 million divided by our total equity of $955.4 million, resulting in a net leverage ratio of 90.6%. Net leverage ratio is a non-GAAP measure and is not intended to replace financial performance measures determined in accordance with GAAP. Rather, they are presented as additional information because management believes they are useful indicators of the current financial performance of the Company’s core businesses.

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