Prospect Capital Corp
Q1 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +0.75%.
Did PSEC Beat Earnings? Q1 2026 Results
Prospect Capital Corporation swung back to profitability in its fiscal third quarter ended March 31, 2026, posting net income of $26.41 million, or $0.05 per share, compared to a net loss of $171.33 million, or $0.39 per share, in the year-ago period. The turnaround was driven primarily by $57.64 million in net unrealized gains, which sharply reversed the $160.87 million in unrealized losses that weighed on results a year earlier, though net realized losses of $79.11 million provided a meaningful offset. Net investment income softened to $78.46 million, or $0.16 per share, from $83.49 million a year ago, reflecting total investment income of $150.07 million against $170.72 million in the prior-year quarter. NAV per share declined to $6.05 from $6.21 at December 31, 2025. Looking ahead, Prospect is prioritizing a continued rotation into first lien senior secured middle-market loans, which already account for 72.0% of investments at cost, while targeting additional exits from its real estate and equity-linked holdings to redeploy capital into higher-yielding core assets.
- Return to positive net income driven by $57.6 million in net unrealized gains vs. $160.9 million unrealized losses in year-ago quarter
- Rotation into first lien senior secured loans now at 72.0% of portfolio at cost, up 790 basis points since June 2024
- Complete exit of subordinated structured notes portfolio (0.0% from 8.37% in June 2024)
- Net investment income of $78.5 million ($0.16/share) declined from $83.5 million ($0.19/share) year-over-year
- Total investment income declined to $150.1 million from $170.7 million in year-ago quarter
- Net realized losses of $79.1 million partially offset unrealized appreciation
- Middle-market investments comprised 94% of $115.3 million in quarterly originations
“Prospect is actively assessing and implementing the best use cases for artificial intelligence and automation within our critical business processes, including both within our investment processes as well as at the portfolio company operational level.”
Prospect Capital CEO, on the earnings call
Forward Guidance & Outlook
Prospect outlined several strategic drivers focused on optimizing its business: (1) continued rotation into core first lien senior secured middle-market loans with selected equity-linked investments, focusing on companies with less than $50 million EBITDA; (2) reduction in second lien exposure; (3) completed exit of subordinated structured notes portfolio; (4) targeted exit of equity-linked assets including real estate properties and certain corporate investments, with additional potential exits in process; (5) enhancement of portfolio company performance through AI and automation initiatives; and (6) utilization of cost-effective floating rate revolver matched against majority floating rate assets. NPRC has multiple additional properties in various stages of sale processes for potential recycling into higher-yielding first lien loans.
PSEC YoY Financials
Figures from SEC filings and company reports. Not investment advice.