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

Quarterly report [Sections 13 or 15(d)]

Investments (Tables)

Investments (Tables)

3 Months Ended

Mar. 31, 2025

Schedule of Investments in and Advances to Affiliates

The following table summarizes the Company’s realized gains and losses and changes in unrealized appreciation and depreciation on control and affiliate investments for the three months ended March 31, 2025 and 2024.


(in thousands)				For the Three Months Ended March 31, 2025
Portfolio Company(1)	Type	Fair Value as of March 31, 2025		Interest & Dividend Income		Fee Income		Net Change in Unrealized Appreciation (Depreciation)		Realized Gain (Loss)
Control Investments
Coronado Aesthetics, LLC	Control	$	47	$	—	$	—	$	(22)	$	—
Gibraltar Acquisition LLC(2)	Control	58,900		1,567		39		(941)		—
Hercules Adviser LLC(3)	Control	45,017		1,900		—		2,827		—
Tectura Corporation	Control	11,770		170		—		113		—
Total Control Investments		$	115,734	$	3,637	$	39	$	1,977	$	—


(in thousands)				For the Three Months Ended March 31, 2024
Portfolio Company(1)	Type	Fair Value as of March 31, 2024		Interest & Dividend Income		Fee Income		Net Change in Unrealized Appreciation (Depreciation)		Realized Gain (Loss)
Control Investments
Coronado Aesthetics, LLC	Control	$	283	$	—	$	—	$	21	$	—
Gibraltar Acquisition, LLC(2)	Control	57,931		1,033		36		(4,621)		—
Hercules Adviser LLC(3)	Control	41,884		1,752		—		1,171		—
Tectura Corporation	Control	12,117		172		—		600		—
Total Control Investments		$	112,215	$	2,957	$	36	$	(2,829)	$	—

(1)In accordance with Rules 3-09, 4-08(g), and Rule 10-01(b)(1) of Regulation S-X, (“Rule 3-09”, “Rule 4-08(g)”, and “Rule 10-01(b)(1)”, respectively), the Company must determine if its unconsolidated subsidiaries are considered “significant subsidiaries”. As of March 31, 2025 and March 31, 2024, there were no unconsolidated subsidiaries that are considered “significant subsidiaries”.

(2)Gibraltar Acquisition LLC is a wholly-owned subsidiary, which is the holding company for their wholly-owned affiliated portfolio companies, Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC. The subsidiary has no significant assets or liabilities, other than their equity and debt investments and equity interest in Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC, respectively.

(3)Hercules Adviser LLC is owned by Hercules Capital Management LLC and presented with Hercules Partner Holdings, LLC which are both wholly owned by the Company. Please refer to “Note 1 - Description of Business” for additional disclosure.

Schedule of Investments Portfolio

The following table shows the fair value of the Company’s portfolio of investments by asset class as of March 31, 2025 and December 31, 2024:


(in thousands)	March 31, 2025				December 31, 2024

	Investments at Fair Value		Percentage of Total Portfolio		Investments at Fair Value		Percentage of Total Portfolio
Senior Secured Debt	$	3,674,498	93.6	%	$	3,419,044	93.4	%
Unsecured Debt	64,736		1.7	%	75,557		2.1	%
Preferred Stock	52,662		1.3	%	53,802		1.5	%
Common Stock	94,088		2.4	%	74,855		2.0	%
Warrants	31,473		0.8	%	30,500		0.8	%
Investment Funds & Vehicles	6,993		0.2	%	6,220		0.2	%
Total	$	3,924,450	100.0	%	$	3,659,978	100.0	%

A summary of the Company’s investment portfolio, at value, by geographic location as of March 31, 2025 and December 31, 2024 is shown as follows:


(in thousands)	March 31, 2025				December 31, 2024
	Investments at Fair Value		Percentage of Total Portfolio		Investments at Fair Value		Percentage of Total Portfolio
United States	$	3,489,550	88.9	%	$	3,288,737	89.9	%
Netherlands	132,889		3.4	%	59,157		1.6	%
United Kingdom	119,905		3.1	%	142,183		3.9	%
Switzerland	56,421		1.5	%	—		0.0	%
Germany	49,417		1.3	%	49,255		1.3	%
Israel	44,321		1.1	%	88,066		2.4	%
Canada	16,229		0.4	%	16,251		0.4	%
Denmark	9,111		0.2	%	9,284		0.3	%
Ireland	4,647		0.1	%	4,649		0.1	%
Singapore	1,590		0.0	%	1,996		0.1	%
Other	370		0.0	%	400		0.0	%
Total	$	3,924,450	100.0	%	$	3,659,978	100.0	%

The following table shows the fair value of the Company’s portfolio by industry sector as of March 31, 2025 and December 31, 2024:


(in thousands)	March 31, 2025				December 31, 2024
	Investments at Fair Value		Percentage of Total Portfolio		Investments at Fair Value		Percentage of Total Portfolio
Software	$	1,262,813	32.2	%	$	1,081,100	29.5	%
Drug Discovery & Development	1,119,941		28.5	%	1,080,390		29.5	%
Healthcare Services, Other	625,556		15.9	%	610,184		16.7	%
Consumer & Business Services	374,561		9.6	%	372,641		10.2	%
Electronics & Computer Hardware	167,370		4.3	%	162,888		4.5	%
Diversified Financial Services	117,366		3.0	%	113,491		3.1	%
Medical Devices & Equipment	75,238		1.9	%	74,962		2.0	%
Space Technologies	49,527		1.3	%	45,700		1.2	%
Biotechnology Tools	34,819		0.9	%	35,434		1.0	%
Communications & Networking	27,601		0.7	%	27,700		0.8	%
Information Services	24,923		0.6	%	24,356		0.7	%
Sustainable and Renewable Technology	22,396		0.6	%	27,696		0.8	%
Manufacturing Technology	20,653		0.5	%	1,162		0.0	%
Consumer & Business Products	1,139		0.0	%	1,497		0.0	%
Semiconductors	425		0.0	%	704		0.0	%
Media/Content/Info	114		0.0	%	63		0.0	%
Drug Delivery	8		0.0	%	10		0.0	%

Total	$	3,924,450	100.0	%	$	3,659,978	100.0	%

The following table summarizes information related to our SBICs as of March 31, 2025 and December 31, 2024.


	March 31, 2025						December 31, 2024
Description	HC IV			SBIC V			HC IV			SBIC V
Number of investments held	35			14			33			11
Fair value of investments (in millions)	$	376.1		$	194.7		$	377.7		$	155.6
Percentage of fair value of investments based on the Company's total investment portfolio	9.6		%	5.0		%	10.3		%	4.3		%
Tangible assets (in millions)	$	381.4		$	197.6		$	382.9		$	157.8
Percentage of tangible assets based on the Company's total assets	9.5		%	4.9		%	10.0		%	4.1		%

Schedule of Investment Collateral

The Company's investments were collateralized as follows as of March 31, 2025 and December 31, 2024:


	Percentage of debt investments (at fair value), as of
	March 31, 2025		December 31, 2024
Senior Secured First Lien
All assets including intellectual property	69.0	%	67.1	%
All assets with negative pledge on intellectual property	13.8	%	14.2	%
“Last-out” with security interest in all of the assets	8.1	%	9.7	%
Total senior secured first lien position	90.9	%	91.0	%
Second lien	7.4	%	6.8	%
Unsecured	1.7	%	2.2	%
Total debt investments at fair value	100.0	%	100.0	%

Summary of Fair Value and Location of the Company's Derivative Instruments

The following is a summary of the fair value and location of the Company’s derivative instruments in the Consolidated Statements of Assets and Liabilities held as of March 31, 2025 and December 31, 2024:


(in thousands)		Fair Value
Derivative Instrument	Statement Location	March 31, 2025		December 31, 2024
Foreign currency forward contract	Other assets	$	—	$	538
Foreign currency forward contract	Accounts payable and accrued liabilities	301		—
	Total	$	301	$	538

Summary of Net Realized and Unrealized Gains and Losses

Net realized and unrealized gains and losses on derivative instruments recorded by the Company during the three months ended March 31, 2025 and 2024 are in the following locations in the Consolidated Statements of Operations:


(in thousands)		Three Months Ended March 31,
Derivative Instrument	Statement Location	2025		2024

Foreign currency forward contract	Net change in unrealized appreciation (depreciation) - Non-control / Non-affiliate investments	$	(840)	$	229
	Total	$	(840)	$	229

Schedule of Investment Interest Income and Fee Income

The Company’s investment portfolio generates interest, fee, and dividend income. The composition of the Company’s interest income and fee income is as follows:


(in thousands)	Three Months Ended March 31,
	2025		2024
Contractual interest income	$	87,817	$	90,714
Exit fee interest income	10,228		11,880
PIK interest income	13,473		9,897
Dividend income	2,400		1,600
Other investment income(1)	1,654		1,688
Total interest and dividend income	$	115,572	$	115,779

Recurring fee income	$	2,680	$	2,455
Fee income - expired commitments	317		647
Accelerated fee income - early repayments	942		2,672
Total fee income	$	3,939	$	5,774

(1)Other investment income includes OID interest income and interest recorded on other assets.

Schedule of Unamortized Capitalized Fee Income

As of March 31, 2025 and December 31, 2024, unamortized capitalized fee income was recorded as follows:


(in millions)	March 31, 2025		December 31, 2024
Offset against debt investment cost	$	37.2	$	36.9
Deferred obligation contingent on funding or other milestone	10.2		9.1
Total Unamortized Fee Income	$	47.4	$	46.0

Schedule of Loan Exit Fees Receivable

As of March 31, 2025 and December 31, 2024, loan exit fees receivable were recorded as follows:


(in millions)	March 31, 2025		December 31, 2024
Included within debt investment cost	$	41.5	$	39.2
Deferred receivable related to expired commitments	2.9		3.0
Total Exit Fees Receivable	$	44.4	$	42.2

- Definition

Tabular disclosure of all significant concentrations of risk, including credit risk and market risk, arising from all financial instruments (as defined), whether from an individual counterparty or groups of counterparties. The disclosure concerning concentrations of risk may consist of the following information: (1) for concentrations of credit risk disclosure may include: (a) information about the (shared) activity, region, or economic characteristic that identifies the concentration, (b) the maximum amount of loss due to credit risk that, based on the gross fair value of the financial instrument, the entity would incur if parties to the financial instruments that make up the concentration failed completely to perform according to the terms of the contracts and the collateral or other security, if any, for the amount due proved to be of no value to the entity, (c) the policy of requiring collateral or other security to support financial instruments subject to credit risk, information about the entity's access to that collateral or other security, and the nature and a brief description of the collateral or other security supporting those financial instruments, and (d) the policy of entering into master netting arrangements to mitigate the credit risk of financial instruments, information about the arrangements for which the entity is a party, and a brief description of the terms of those arrangements, including the extent to which they would reduce the entity's maximum amount of loss due to credit risk and (2) for disclosure of quantitative information about the market risks of financial instruments that is consistent with the way the company manages or adjusts those risks, disclosure may include: (a) more details about current positions and perhaps activity during the period, (b) the hypothetical effects on comprehensive income (or net assets), or annual income, of several possible changes in market prices, (c) a gap analysis of interest rate re-pricing or maturity dates, (d) the duration of the financial instruments, (e) the entity's value at risk from derivatives and from other positions at the end of the reporting period and the average value at risk during the year, or (f) other ways of reporting quantitative information as internally developed.

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