Hercules Capital, Inc. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Fair Value of Financial Instruments (Tables)

Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2026

Schedule of Investments Measured at Fair Value on Recurring Basis

Investments measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations as of March 31, 2026 and December 31, 2025.


(in thousands)	Balance as of March 31, 2026		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description
Cash and cash equivalents
Money Market Fund(1)	$	8,080	$	8,080	$	—	$	—

Other assets and liabilities
Escrow Receivables	$	114	$	—	$	—	$	114
Accounts Payable and Accrued Liabilities	(86)		—		—		(86)

Investments
Senior Secured Debt	$	4,469,019	$	—	$	—	$	4,469,019
Unsecured Debt	71,126		—		—		71,126
Preferred Stock	53,449		—		—		53,449
Common Stock(2)	78,659		19,575		—		59,084
Warrants	42,507		—		11,631		30,876
	$	4,714,760	$	19,575	$	11,631	$	4,683,554
Investment Funds & Vehicles measured at Net Asset Value(3)	7,227
Total Investments, at fair value	$	4,721,987
Derivative Instruments(4)	522
Total Investments including cash and cash equivalents and derivative instruments	$	4,730,589


(in thousands)	Balance as of December 31, 2025		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description
Cash and cash equivalents
Money Market Fund(1)	$	10,250	$	10,250	$	—	$	—

Other assets and liabilities
Escrow Receivables	$	168	$	—	$	—	$	168
Accounts Payable and Accrued Liabilities	(87)		$	—	$	—	(87)

Investments
Senior Secured Debt	$	4,209,798	$	—	$	—	$	4,209,798
Unsecured Debt	69,614		—		—		69,614
Preferred Stock	52,735		—		—		52,735
Common Stock(2)	86,275		21,555		—		64,720
Warrants	41,162		—		13,101		28,061
	$	4,459,584	$	21,555	$	13,101	$	4,424,928
Investment Funds & Vehicles measured at Net Asset Value(3)	7,063
Total Investments, at fair value	$	4,466,647
Derivative Instruments(4)	50
Total Investments including cash and cash equivalents and derivative instruments	$	4,476,947

(1)This investment is included in Cash and cash equivalents in the accompanying Consolidated Statements of Assets and Liabilities.

(2)Common stock includes non-voting security in the form of a promissory note with a lien on shares of issuer's common stock.

(3)In accordance with U.S. GAAP, certain investments are measured at fair value using the NAV per share (or its equivalent) as a practical expedient and are not categorized within the fair value hierarchy as per ASC 820. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the accompanying Consolidated Statements of Assets and Liabilities.

(4)Derivative Instruments are carried at fair value and are a Level 2 security within the Company's fair value hierarchy.

Schedule of Reconciliation Changes for Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The table below presents a reconciliation of changes for all financial assets and liabilities measured at fair value on a recurring basis, excluding accrued interest components, using significant unobservable inputs (Level 3) for the three months ended March 31, 2026 and 2025.


(in thousands)	Balance as of January 1, 2026		Net Realized Gains (Losses)(1)		Net Change in Unrealized Appreciation (Depreciation)(2)		Purchases(5)		Capitalized PIK Interest		Sales		Repayments(6)		Gross Transfers into Level 3(3)*		Gross Transfers out of Level 3(3)*		Balance as of March 31, 2026

Investments
Senior Secured Debt	$	4,209,798	$	—	$	(34,788)	$	524,980	$	11,879	$	(7,500)	$	(235,350)	$	—	$	—	$	4,469,019
Unsecured Debt	69,614		—		(2,391)		3,036		867		—		—		—		—		71,126
Preferred Stock	52,735		77		(3,148)		6,056		—		(2,271)		—		—		—		53,449
Common Stock	64,720		(1,910)		(4,074)		648		—		(300)		—		—		—		59,084
Warrants	28,061		(68)		1,920		1,012		—		(49)		—		—		—		30,876
Other Assets and Liabilities
Escrow Receivables	168		(33)		—		22		—		(43)		—		—		—		114
Accounts Payable and Accrued Liabilities	(87)		—		—		1		—		—		—		—		—		(86)
Total	$	4,425,009	$	(1,934)	$	(42,481)	$	535,755	$	12,746	$	(10,163)	$	(235,350)	$	—	$	—	$	4,683,582


(in thousands)	Balance as of January 1, 2025		Net Realized Gains (Losses)(1)		Net Change in Unrealized Appreciation (Depreciation)(2)		Purchases(5)		Capitalized PIK Interest		Sales		Repayments(6)		Gross Transfers into Level 3(4)*		Gross Transfers out of Level 3(4)*		Balance as of March 31, 2025
Investments
Senior Secured Debt	$	3,419,044	$	(48)	$	(25,181)	$	416,157	$	12,673	$	—	$	(148,147)	$	—	$	—	$	3,674,498
Unsecured Debt	75,557		—		65		63		1,273		—		—		—		(12,222)		64,736
Preferred Stock	53,802		—		(3,953)		2,813		—		—		—		—		—		52,662
Common Stock	44,593		(670)		(2,014)		—		—		(331)		—		17,316		—		58,894
Warrants	21,823		(63)		(1,527)		352		—		—		—		—		—		20,585
Other Assets and Liabilities
Escrow and Other Investment Receivables	152		56		—		1,814		—		(56)		—		—		—		1,966
Accounts Payable and Accrued Liabilities	(1,012)		—		358		44		—		(362)		—		—		—		(972)
Total	$	3,613,959	$	(725)	$	(32,252)	$	421,243	$	13,946	$	(749)	$	(148,147)	$	17,316	$	(12,222)	$	3,872,369

* The Company recognizes transfers as of the transaction date.

(1)Included in net realized gains (losses) in the accompanying Consolidated Statements of Operations.

(2)Included in net change in unrealized appreciation (depreciation) in the accompanying Consolidated Statements of Operations.

(3)There were no transfers into or out of Level 3 during the three months ended March 31, 2026.

(4)Transfers out of Level 3 during the three months ended March 31, 2025 related to the conversion of the Company's Level 3 debt investments in the Adviser Subsidiary and Carbon Health Technologies, Inc., into common stock Level 3 investments. Transfers into Level 3 during the three months ended March 31, 2025 included the conversion of 23andMe, Inc. Level 1 common stock into Level 3 common stock due to bankruptcy and delisting.

(5)Amounts listed above are inclusive of loan origination fees received at the inception of the loan which are deferred and amortized into fee income as well as the accretion of existing loan discounts and fees during the period. Escrow receivable purchases may include additions due to proceeds held in escrow from the liquidation of Level 3 investments. Amounts are net of purchases assigned to the Adviser Funds.

(6)Amounts listed above include the acceleration and payment of loan discounts and loan fees due to early payoffs or restructures along with regularly scheduled amortization.

Schedule of Unrealized Gain (Loss) on Investments

The following table presents the net unrealized appreciation (depreciation) recorded for debt, preferred stock, common stock and warrant Level 3 investments relating to assets still held at the reporting date.


(in millions)	Three Months Ended March 31,
	2026		2025
Debt investments	$	(33.4)	$	(23.4)
Preferred stock	(3.1)		(4.0)
Common stock	(6.0)		(2.3)
Warrant investments	1.9		(1.6)

Schedule of Quantitative Information of Fair Value Measurements

The following tables provide quantitative information about the Company’s Level 3 fair value measurements as of March 31, 2026 and December 31, 2025. In addition to the techniques and inputs noted in the tables below, according to the Company’s valuation guidelines, the Company may also use other valuation techniques and methodologies when determining the Company’s fair value measurements. The tables below are not intended to be all-inclusive, but rather provide information on the significant Level 3 inputs as they relate to the Company’s fair value measurements. See the accompanying Consolidated Schedule of Investments for the fair value of the Company’s investments. The methodology for the determination of the fair value of the Company’s investments is discussed in “Note 2 – Summary of Significant Accounting Policies”. The significant unobservable input used in the fair value measurement of the Company’s escrow receivables is the amount recoverable at the contractual maturity date of the escrow receivable.


Investment Type - Level 3 Debt Investments	Fair Value as of March 31, 2026 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input(1)	Range	Weighted Average(2)
Pharmaceuticals	$	721,599	Market Comparable Companies	Hypothetical Market Yield	9.40% - 17.06%	11.90%
				Premium/(Discount)	(2.00%) - 2.00%	(0.81%)


Technology	1,719,485		Market Comparable Companies	Hypothetical Market Yield	9.39% - 18.84%	12.96%
				Premium/(Discount)	(2.75%) - 6.00%	0.04%
	29,462		Convertible Note Analysis	Probability weighting of alternative outcomes	5.00% - 95.00%	90.46%
	24,889		Liquidation(3)	Probability weighting of alternative outcomes	5.00% - 95.00%	61.59%




Medical Devices	74,905		Market Comparable Companies	Hypothetical Market Yield	12.45% - 13.98%	13.42%
				Premium/(Discount)	(0.25%) - 0.50%	0.11%

Lower Middle Market	894,810		Market Comparable Companies	Hypothetical Market Yield	10.89% - 20.07%	13.91%
				Premium/(Discount)	(1.50%) - 4.50%	0.21%


Debt Investments for which Cost Approximates Fair Value
	479,165		Debt Investments originated within 6 months
	348,464		Imminent Payoffs(4)
	206,075		Debt Investments Maturing in Less than One Year
	41,291		Debt Investments in Wholly-Owned Subsidiaries
	$	4,540,145	Total Level 3 Debt Investments
Escrow Receivables	114		Expected Proceeds
Accounts Payable and Accrued Liabilities	(86)		Liquidation(3)	Probability weighting of alternative outcomes	10.00% - 50.00%	44.84%
	$	4,540,173	Total Level 3 Debt Investments and Other Assets (Liabilities)

(1)The significant unobservable inputs used in the fair value measurement of the Company’s debt securities are hypothetical market yields and premiums/(discounts). The hypothetical market yield is defined as the exit price of an investment in a hypothetical market to hypothetical market participants where buyers and sellers are willing participants. The premiums/(discounts) relate to company specific characteristics such as underlying investment performance, security liens, and other characteristics of the investment. Significant increases (decreases) in the inputs in isolation may result in a significantly lower (higher) fair value measurement, depending on the materiality of the investment.

Debt investments in the industries noted in the Company’s Consolidated Schedule of Investments are included in the industries noted above as follows:

•Pharmaceuticals, above, is comprised of debt investments in the “Biotechnology Tools” and “Drug Discovery & Development” industries.

•Technology, above, is comprised of debt investments in the “Application Software”, “Communications & Networking”, “Consumer & Business Services”, “Defense Technologies”, “Electronics & Computer Hardware”, “Healthcare Services, Other”, “Information Services”, “Manufacturing Technology”, “Space Technologies”, and “System Software” industries.

•Medical Devices, above, is comprised of debt investments in the “Medical Devices & Equipment” industry.

•Lower Middle Market, above, is comprised of debt investments in the “Application Software”, “Consumer & Business Products”, “Consumer & Business Services”, “Diversified Financial Services”, “Healthcare Services, Other”, and “Sustainable and Renewable Technology” industries.

(2)The weighted averages are calculated based on the fair market value of each investment.

(3)The significant unobservable input used in the fair value measurement of impaired debt securities and other investment receivables (payables) is the probability weighting of alternative outcomes.

(4)Imminent Payoffs represent debt investments that the Company expects to be repaid within the next three months, prior to their scheduled maturity date.


Investment Type - Level 3 Debt Investments	Fair Value as of December 31, 2025 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input(1)	Range	Weighted Average(2)
Pharmaceuticals	$	777,671	Market Comparable Companies	Hypothetical Market Yield	9.01% - 15.39%	11.97%
				Premium/(Discount)	(2.50%) - 2.00%	(0.34%)


Technology	1,779,826		Market Comparable Companies	Hypothetical Market Yield	9.58% - 17.46%	12.30%
				Premium/(Discount)	(1.50%) - 4.50%	0.22%
	30,986		Convertible Note Analysis	Probability weighting of alternative outcomes	1.00% - 70.00%	51.23%
	73,268		Liquidation(3)	Probability weighting of alternative outcomes	10.00% - 90.00%	76.29%

Sustainable and Renewable Technology	30,201		Market Comparable Companies	Hypothetical Market Yield	15.89% - 16.25%	16.04%
				Premium/(Discount)	0.75% - 0.75%	0.75%

Medical Devices	74,771		Market Comparable Companies	Hypothetical Market Yield	12.18% - 14.21%	13.36%
				Premium/(Discount)	(0.25%) - 0.50%	0.11%

Lower Middle Market	814,412		Market Comparable Companies	Hypothetical Market Yield	10.30% - 18.73%	13.60%
				Premium/(Discount)	(0.50%) - 4.00%	0.60%

Debt Investments for which Cost Approximates Fair Value
	403,710		Debt Investments originated within 6 months
	7,711		Imminent Payoffs(4)
	248,601		Debt Investments Maturing in Less than One Year
	38,255		Debt Investments in Wholly-Owned Subsidiaries
	$	4,279,412	Total Level 3 Debt Investments
Escrow Receivables	168		Expected Proceeds
Accounts Payable and Accrued Liabilities	(87)		Liquidation(3)	Probability weighting of alternative outcomes	10.00% - 50.00%	44.84%
	$	4,279,493	Total Level 3 Debt Investments and Other Assets (Liabilities)

Debt investments in the industries noted in the Company’s Consolidated Schedule of Investments are included in the industries noted above as follows:

•Pharmaceuticals, above, is comprised of debt investments in the “Drug Discovery & Development”, “Biotechnology Tools”, and “Healthcare Services, Other” industries.

•Technology, above, is comprised of debt investments in the “Communications & Networking”, “Information Services”, “Consumer & Business Services”, “Media/Content/Info”, “Space Technologies”, “Defense Technologies”, “Manufacturing Technology”, “Electronics & Computer Hardware”, “Application Software”, and “System Software” industries.

•Sustainable and Renewable Technology, above, is comprised of debt investments in the “Sustainable and Renewable Technology” industry.

•Medical Devices, above, is comprised of debt investments in the “Medical Devices & Equipment” industry.

•Lower Middle Market, above, is comprised of debt investments in the “Healthcare Services – Other”, “Consumer & Business Services”, “Diversified Financial Services”, “Sustainable and Renewable Technology”, “Consumer & Business Products”, and “Application Software” industries.

(2)The weighted averages are calculated based on the fair market value of each investment.

(3)The significant unobservable input used in the fair value measurement of impaired debt securities and other investment receivables (payables) is the probability weighting of alternative outcomes.

(4)Imminent payoffs represent debt investments that the Company expects to be repaid within the next three months, prior to their scheduled maturity date.


Investment Type - Level 3 Equity and Warrant Investments	Fair Value as of March 31, 2026 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input(1)	Range	Weighted Average(5)
Equity Investments	$	46,476	Market Comparable Companies	Revenue Multiple(2)	0.1x - 9.2x	3.1x

				Tangible Book Value Multiple(2)	1.6x - 1.6x	1.6x
				Discount for Lack of Marketability(3)	14.80% - 91.85%	27.83%
	12,236		Market Adjusted OPM Backsolve	Market Equity Adjustment(4)	(92.01%) - 1.35%	(22.88%)
	46,127		Discounted Cash Flow	Discount Rate(7)	11.29% - 35.31%	32.99%


	7,694		Other(6)
Warrant Investments	17,501		Market Comparable Companies	Revenue Multiple(2)	0.5x - 12.7x	3.7x

				Discount for Lack of Marketability(3)	14.80% - 35.70%	25.15%
	11,967		Market Adjusted OPM Backsolve	Market Equity Adjustment(4)	(65.94%) - 102.93%	18.43%
	1,408		Other(6)
Total Level 3 Equity and Warrant Investments	$	143,409

(1)The significant unobservable inputs used in the fair value measurement of the Company’s warrant and equity securities are revenue and/or earnings multiples (e.g. EBITDA, EBT, ARR), market equity adjustment factors, discount rate, and discounts for lack of marketability. Significant increases/(decreases) in the inputs in isolation would result in a significantly higher/(lower) fair value measurement, depending on the materiality of the investment. For some investments, additional consideration may be given to data from the last round of financing or merger/acquisition events near the measurement date. The significant unobservable input used in the fair value measurement of impaired equity securities is the probability weighting of alternative outcomes.

(2)Represents amounts used when the Company has determined that market participants would use such multiples when pricing the investments.

(3)Represents amounts used when the Company has determined market participants would take into account these discounts when pricing the investments.

(4)Represents the range of changes in industry valuations since the portfolio company's last external valuation event.

(5)Weighted averages are calculated based on the fair market value of each investment.

(6)The fair market value of these investments is derived based on recent private market and merger and acquisition transaction prices.

(7)The discount rate used is based on current portfolio yield adjusted for uncertainty of actual performance and timing in capital deployments.


Investment Type - Level 3 Equity and Warrant Investments	Fair Value as of December 31, 2025 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input(1)	Range	Weighted Average(5)

Equity Investments	$	48,874	Market Comparable Companies	Revenue Multiple(2)	0.1x - 12.3x	4.5x
				Tangible Book Value Multiple(2)	1.7x - 1.7x	1.7x
				Discount for Lack of Marketability(3)	9.44% - 92.30%	26.25%
	7,702		Market Adjusted OPM Backsolve	Market Equity Adjustment(4)	(89.31%) - 70.57%	(7.13%)
	51,250		Discounted Cash Flow	Discount Rate(7)	11.14% - 33.18%	30.09%


	9,629		Other(6)

Warrant Investments	19,318		Market Comparable Companies	Revenue Multiple(2)	0.3x - 13.0x	5.5x
				Discount for Lack of Marketability(3)	13.28% - 36.40%	26.90%
	8,283		Market Adjusted OPM Backsolve	Market Equity Adjustment(4)	(60.90%) - 87.40%	26.66%
	460		Other(6)


Total Level 3 Equity and Warrant Investments	$	145,516

(2)Represents amounts used when the Company has determined that market participants would use such multiples when pricing the investments.

(3)Represents amounts used when the Company has determined market participants would take into account these discounts when pricing the investments.

(4)Represents the range of changes in industry valuations since the portfolio company's last external valuation event.

(5)Weighted averages are calculated based on the fair market value of each investment.

(6)The fair market value of these investments is derived based on recent private market and merger and acquisition transaction prices.

(7)The discount rate used is based on current portfolio yield adjusted for uncertainty of actual performance and timing in capital deployments.

Schedule of Fair Value Hierarchy of Outstanding Borrowings

The following tables provide additional information about the approximate fair value and level in the fair value hierarchy of the Company’s outstanding borrowings as of March 31, 2026 and December 31, 2025:


(in thousands)	March 31, 2026
Description	Carrying Value		Approximate Fair Value		Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Market Quotations (Level 2)*
SBA Debentures (1)	$	341,301	$	333,445	$	—	$	—	$	333,445	$	—






September 2026 Notes	324,548		321,090		—		321,090		—		0.988
January 2027 Notes	348,928		344,127		—		344,127		—		0.983
2028 Convertible Notes	281,076		280,152		—		280,152		—		0.974
February 2029 Notes	294,267		294,756		—		294,756		—		0.983
June 2030 Notes	343,104		344,617		—		344,617		—		0.985
2031 Asset-Backed Notes	64,466		63,325		—		63,325		—		0.982
2033 Notes (2)	39,178		39,648		—		39,648		—		0.991

MUFG Bank Facility (3)	220,000		220,000		—		—		220,000		—
SMBC Facility (3)	282,164		282,307		—		—		282,307		—
Total	$	2,539,032	$	2,523,467	$	—	$	1,687,715	$	835,752

* Level 2 market quotations are the observable market quotations per dollar at par value on the last trading day of the quarter ended March 31, 2026.

(1)The fair values of the SBA debentures (as defined in "Note 5 - Debt") are calculated based on the net present value of payments over the term of the notes using estimated market rates for similar notes and remaining terms.

(2)As of March 31, 2026, the 2033 Notes (as defined in “Note 5 - Debt”) were trading on the New York Stock Exchange (“NYSE”) at $24.78 per unit at par value. The par value at underwriting for the 2033 Notes was $25.00 per unit.

(3)The fair values of the outstanding debt under the MUFG Bank Facility and the SMBC Facility (each as defined in “Note 5 - Debt”) are equal to their outstanding principal balances as of March 31, 2026.


(in thousands)	December 31, 2025
Description	Carrying Value		Approximate Fair Value		Identical Assets (Level 1)		Observable Inputs (Level 2) (1)		Unobservable Inputs (Level 3) (2)
SBA Debentures	$	341,012	$	335,905	$	—	$	—	$	335,905




March 2026 A Notes	49,984		50,615		—		—		50,615
March 2026 B Notes	49,983		50,627		—		—		50,627
September 2026 Notes	324,302		320,186		—		—		320,186
January 2027 Notes	348,596		346,365		—		—		346,365
2028 Convertible Notes	280,412		286,870		—		286,870		—
June 2030 Notes	342,694		352,274		—		—		352,274
2031 Asset-Backed Notes	64,530		63,486		—		63,486		—
2033 Notes	39,151		40,784		—		40,784		—
MUFG Bank Facility (3)	168,000		168,000		—		—		168,000
SMBC Facility (3)	277,780		277,934		—		—		277,934
Total	$	2,286,444	$	2,293,046	$	—	$	391,140	$	1,901,906

(1)The Company estimated the fair value of its debt instruments classified within Level 2 using observable market quotations on the last trading day of the quarter ended December 31, 2025. Based on such market quotations, the 2031 Asset-Backed Notes were quoted for 0.982 and the

2028 Convertible Notes were quoted for 0.998 per dollar at par value. As of December 31, 2025, the 2033 Notes were trading on the NYSE at $25.49 per unit at par value. The par value at underwriting for the 2033 Notes was $25.00 per unit.

(2)As of December 31, 2025, the fair values of the SBA debentures, March 2026 A Notes, March 2026 B Notes, September 2026 Notes, January 2027 Notes, and June 2030 Notes (each as defined in “Note 5 - Debt”) are calculated based on the net present value of payments over the term of the notes using estimated market rates for similar notes and remaining terms.

(3)The fair values of the outstanding debt under the MUFG Bank Facility and the SMBC Facility are equal to their outstanding principal balances as of December 31, 2025.