Saratoga Investment Corp reported second-quarter adjusted earnings per share of $0.46, missing the analyst consensus estimate of $0.49 by 6.12%. This represents a 20.69% decline from the $0.58 EPS recorded in the same period last year.

Financial Performance Overview

The company’s top-line growth remained modest despite the bottom-line contraction. Quarterly sales clocked in at $31.169 million, a 1.77% increase from $30.626 million in the corresponding quarter of the previous year. However, this figure also missed the consensus revenue estimate of $31.700 million by 1.68%.

Portfolio and Balance Sheet Updates

Assets Under Management (AUM) grew 2.1% sequentially to $1.150 billion, driven by net originations of $37.1 million. The company originated $76.1 million in investments, including two new portfolio companies, against repayments of $39.0 million. Non-accruals remained low at 0.0% of fair value and 1.3% of cost.

Net Asset Value (NAV) declined to $352.6 million from $378.5 million in the prior quarter. NAV per share fell to $22.15, down from $23.23. Management attributed the decline primarily to unrealized depreciation on specific credits, including Madison Logic, Exigo, and Chronus, which accounted for $13.1 million of write-downs. This was partially offset by $4.5 million of appreciation in Zollege and $0.09 per share accretion from share repurchases.

Capital Structure and Liquidity

Saratoga issued $85.0 million in 8.00% fixed-rate notes due 2031, subsequently increasing the issuance to $120.8 million through green shoe exercises and reopenings. These proceeds were used to refinance the $105.5 million SAT baby bond, reducing refinancing risk. The company also repurchased 444,124 shares at an average price of $18.91, generating $0.09 per share of NAV accretion. Cash and cash equivalents increased to $95.9 million from $60.8 million in the prior quarter.

What the Numbers Show

A significant divergence exists between Saratoga’s revenue trajectory and its profitability metrics. While sales expanded by 1.77% year-over-year, adjusted earnings per share contracted sharply by 20.69%. This indicates that despite stable or slightly growing topline activity, cost pressures or margin compressions significantly impacted net profitability during the quarter. The simultaneous miss on both EPS and revenue suggests broader operational headwinds rather than isolated accounting anomalies. Furthermore, the 13.5% decline in NAV per share YoY contrasts with the 15.6% growth in AUM, highlighting that portfolio valuation adjustments are currently outweighing asset base expansion.

Saratoga Investment Corp. (NYSE: SAR) has priced an underwritten public offering of an additional $20.08 million in aggregate principal amount of 8.00% unsecured notes due 2031 (NYSE: SAX). The pricing follows the commencement of the registered public offering announced earlier this week.

The new securities will form a single series with existing notes issued in August and September 2026. Upon issuance, the outstanding aggregate principal amount of the company's 8.00% unsecured notes due 2031 will be $117,830,325, assuming no exercise of the underwriters' over-allotment option.

Offering Details and Terms

The additional notes are fungible with the $85,000,000 and $12,750,000 in aggregate principal amounts of the 8.00% Notes due 2031 initially issued on August 26, 2026, and September 2, 2026, respectively. These earlier issuances involved the full exercise of underwriters' over-allotment options. The new notes share identical terms with the existing series, except for the issue date and offering price.

The notes will mature on August 31, 2031, and may be redeemed in whole or in part at any time or from time to time at the company's option on or after August 26, 2028. Interest will be paid quarterly on February 28, May 31, August 31, and November 30 of each year, beginning November 30, 2026. The company has granted the underwriters an option to purchase up to an additional $3.0 million in aggregate principal amount of notes.

Lucid Capital Markets, LLC and Oppenheimer & Co. Inc. are serving as joint book-running managers for the transaction. The offering is conducted via a preliminary prospectus supplement dated September 22, 2026, a pricing term sheet dated September 23, 2026, and an accompanying prospectus dated March 11, 2026, all filed with the Securities and Exchange Commission. The offering is expected to close on September 24, 2026, subject to customary closing conditions.

Use of Proceeds

Saratoga plans to deploy the net proceeds from this offering primarily for repaying a portion of outstanding indebtedness under the special purpose vehicle financing credit facility with Valley National Bank. The specific allocation depends on the final amount of net proceeds raised.

Credit Rating and Company Profile

The company has received an investment grade private rating of "BBB" from Egan-Jones Ratings Company, an independent, unaffiliated rating agency. Egan-Jones is a Nationally Recognized Statistical Rating Organization (NRSRO), recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP), and certified by the European Securities and Markets Authority (ESMA).

Saratoga Investment Corp. is a specialty finance company providing customized financing solutions to U.S. middle-market businesses. It invests primarily in senior and unitranche leveraged loans and mezzanine debt. The company operates as a business development company under the Investment Company Act of 1940 and is externally managed by Saratoga Investment Advisors, LLC.

The company owns two active SBIC-licensed subsidiaries and manages a $350 million collateralized loan obligation fund that has recently repriced and reset its reinvestment period. It also co-manages a joint venture that owns a $400 million collateralized loan obligation fund. Saratoga holds 50% of the Class E2R5 notes and 100% of the subordinated notes of its CLO, along with significant stakes in the JV CLO structure.