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)

6 Months Ended

Jun. 30, 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 June 30, 2026 and December 31, 2025.


(in thousands)	Balance as of June 30, 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)	$	22,300	$	22,300	$	—	$	—

Other assets and liabilities
Escrow Receivables	$	182	$	—	$	—	$	182
Accounts Payable and Accrued Liabilities	(93)		—		—		(93)

Investments
Senior Secured Debt	$	4,299,681	$	—	$	—	$	4,299,681
Unsecured Debt	76,543		—		—		76,543
Preferred Stock	55,378		—		—		55,378
Common Stock(2)	93,924		33,126		—		60,798
Warrants	51,295		—		13,177		38,118
	$	4,576,821	$	33,126	$	13,177	$	4,530,518
Investment Funds & Vehicles measured at Net Asset Value(3)	7,049
Total Investments, at fair value	$	4,583,870
Derivative Instruments(4)	354
Total Investments including cash and cash equivalents and derivative instruments	$	4,606,524


(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 six months ended June 30, 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 June 30, 2026

Investments
Senior Secured Debt	$	4,209,798	$	257	$	(27,866)	$	981,383	$	23,671	$	(24,086)	$	(863,476)	$	—	$	—	$	4,299,681
Unsecured Debt	69,614		—		(3,009)		8,168		1,770		—		—		—		—		76,543
Preferred Stock	52,735		1,600		300		7,868		—		(5,794)		—		—		(1,331)		55,378
Common Stock	64,720		(2,217)		(1,826)		721		—		(600)		—		—		—		60,798
Warrants	28,061		457		8,291		3,204		—		(1,594)		—		—		(301)		38,118
Other Assets and Liabilities
Escrow Receivables	168		(33)		(22)		112		—		(43)		—		—		—		182
Accounts Payable and Accrued Liabilities	(87)		—		—		2		—		(8)		—		—		—		(93)
Total	$	4,425,009	$	64	$	(24,132)	$	1,001,458	$	25,441	$	(32,125)	$	(863,476)	$	—	$	(1,632)	$	4,530,607


(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 June 30, 2025
Investments
Senior Secured Debt	$	3,419,044	$	(54,380)	$	21,867	$	974,777	$	24,884	$	(47,500)	$	(421,285)	$	—	$	(5,242)	$	3,912,165
Unsecured Debt	75,557		—		480		109		2,606		—		—		—		(12,222)		66,530
Preferred Stock	53,802		—		(1,973)		2,820		—		—		—		—		—		54,649
Common Stock	44,593		(645)		2,812		908		—		(956)		—		22,558		(5,094)		64,176
Warrants	21,823		(374)		552		2,485		—		(7)		—		—		—		24,479
Other Assets and Liabilities
Escrow and Other Investment Receivables	152		56		—		1,814		—		(1,811)		—		—		—		211
Accounts Payable and Accrued Liabilities	(1,012)		—		751		1,564		—		(1,652)		—		—		—		(349)
Total	$	3,613,959	$	(55,343)	$	24,489	$	984,477	$	27,490	$	(51,926)	$	(421,285)	$	22,558	$	(22,558)	$	4,121,861

* 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)Transfers out of Level 3 during the six months ended June 30, 2026 related to the initial public offerings of Alamar Biosciences, Inc. and HawkEye 360, Inc.

(4)During the three months ended March 31, 2025, 23andMe, Inc. Level 1 common stock was converted into Level 3 common stock due to bankruptcy and delisting. Subsequently, during the three months ended June 30, 2025, 23andMe, Inc. was treated as Level 1 common stock due to resumed trading after reaching a definitive agreement during the bankruptcy proceeding. Transfers out of Level 3 debt investments during the six months ended June 30, 2025 related to the conversion of the Company's Level 3 debt investments in Hercules Adviser LLC, Carbon Health Technologies, Inc., and Khoros, LLC, into common stock Level 3 investments.

(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)	Six Months Ended June 30,
	2026		2025
Debt investments	$	(24.1)	$	(11.4)
Preferred stock	2.2		(2.0)
Common stock	(4.1)		(2.0)
Warrant investments	8.3		0.7

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 June 30, 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 June 30, 2026 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input(1)	Range	Weighted Average(2)
Pharmaceuticals	$	819,960	Market Comparable Companies	Hypothetical Market Yield	8.87% - 17.65%	11.75%
				Premium/(Discount)	(2.00%) - 2.00%	(0.35%)


Technology	1,837,111		Market Comparable Companies	Hypothetical Market Yield	9.28% - 21.23%	12.56%
				Premium/(Discount)	(2.75%) - 8.50%	(0.31%)
	29,747		Convertible Note Analysis	Hypothetical Market Yield	23.22% - 23.22%	23.22%
	59,661		Liquidation(3)	Probability weighting of alternative outcomes	5.00% - 65.00%	54.40%
				Estimated Recovery Rate	0.00% - 31.12%	31.12%




Medical Devices	91,637		Market Comparable Companies	Hypothetical Market Yield	11.72% - 13.03%	12.76%
				Premium/(Discount)	(0.25%) - 0.00%	(0.08%)

Lower Middle Market	925,084		Market Comparable Companies	Hypothetical Market Yield	11.12% - 18.80%	13.63%
				Premium/(Discount)	(1.25%) - 3.50%	0.10%


Debt Investments for which Cost Approximates Fair Value
	357,851		Debt Investments originated within 6 months
	102,618		Imminent Payoffs(4)
	106,232		Debt Investments Maturing in Less than One Year
	46,323		Debt Investments in Wholly-Owned Subsidiaries
	$	4,376,224	Total Level 3 Debt Investments
Escrow Receivables	182		Expected Proceeds
Accounts Payable and Accrued Liabilities	(93)		Liquidation(3)	Probability weighting of alternative outcomes	10.00% - 50.00%	44.84%
	$	4,376,313	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 June 30, 2026 (in thousands)		Valuation Techniques/ Methodologies	Unobservable Input(1)	Range	Weighted Average(5)
Equity Investments	$	45,520	Market Comparable Companies	Revenue Multiple(2)	0.1x - 15.5x	3.0x

				Tangible Book Value Multiple(2)	1.6x - 1.6x	1.6x
				Discount for Lack of Marketability(3)	13.93% - 87.50%	25.72%
	17,850		Market Adjusted OPM Backsolve	Market Equity Adjustment(4)	(88.68%) - 23.34%	(2.52%)
	45,249		Discounted Cash Flow	Discount Rate(7)	11.58% - 35.57%	33.32%


	7,557		Other(6)
Warrant Investments	19,732		Market Comparable Companies	Revenue Multiple(2)	0.5x - 15.5x	3.2x

				Discount for Lack of Marketability(3)	13.93% - 42.26%	24.90%
	14,713		Market Adjusted OPM Backsolve	Market Equity Adjustment(4)	(53.79%) - 165.17%	54.15%
	3,673		Other(6)
Total Level 3 Equity and Warrant Investments	$	154,294

(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 June 30, 2026 and December 31, 2025:


(in thousands)	June 30, 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)	$	341,593	$	335,007	$	—	$	—	$	335,007	$	—






September 2026 Notes	324,793		323,711		—		323,711		—		0.996
January 2027 Notes	349,261		346,843		—		346,843		—		0.991
2028 Convertible Notes	281,741		282,582		—		282,582		—		0.983
February 2029 Notes	294,768		297,633		—		297,633		—		0.992
June 2030 Notes	343,514		349,824		—		349,824		—		0.999
2031 Asset-Backed Notes	50,794		49,392		—		49,392		—		0.972
2033 Notes (2)	39,205		40,160		—		40,160		—		1.004

MUFG Bank Facility (3)	88,000		88,000		—		—		88,000		—
SMBC Facility (3)	221,554		221,689		—		—		221,689		—
Total	$	2,335,223	$	2,334,841	$	—	$	1,690,145	$	644,696

* Level 2 market quotations are the observable market quotations per dollar at par value on the last trading day of the quarter ended June 30, 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 June 30, 2026, the 2033 Notes (as defined in “Note 5 - Debt”) were trading on the New York Stock Exchange (“NYSE”) at $25.10 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 June 30, 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.