MidCap Apollo's Net Assets Rise Amidst Realized Losses

TL;DR

**MidCap Apollo's capital raise masks deteriorating investment performance, with significant realized losses dragging down NAV per share.**

AI Summary

MidCap Apollo Institutional Private Lending reported a net increase in net assets from operations of $24.12 million for the nine months ended September 30, 2025, a decrease from $32.62 million in the same period of 2024. Total investment income slightly increased to $74.69 million for the nine months ended September 30, 2025, up from $74.44 million in 2024, primarily driven by a rise in PIK interest income to $2.39 million from $1.20 million. However, net realized losses on investments significantly impacted performance, reaching $10.09 million for the nine months ended September 30, 2025, compared to a negligible $18 thousand loss in 2024. The company's total net assets grew to $402.91 million as of September 30, 2025, from $364.53 million at December 31, 2024, largely due to $50.00 million in net proceeds from common share issuances. Debt decreased to $511.50 million from $573.52 million, while cash and cash equivalents declined to $14.02 million from $33.28 million. Net asset value per share decreased to $23.65 from $24.43.

Why It Matters

MidCap Apollo's significant increase in net realized losses to $10.09 million for the nine months ended September 30, 2025, compared to a minimal $18 thousand in 2024, signals potential challenges in its private lending portfolio, which could impact future investor returns. While net assets grew due to capital raises, the decline in Net Asset Value Per Share from $24.43 to $23.65 suggests underlying asset performance issues. This could make it harder for MidCap Apollo to compete for new capital against other private credit funds, potentially affecting its ability to deploy capital and generate income. Investors should scrutinize the drivers of these realized losses and the quality of the remaining investment portfolio.

Risk Assessment

Risk Level: medium — The risk level is medium due to the substantial increase in net realized losses on investments, from $18 thousand in the nine months ended September 30, 2024, to $10.09 million in the same period of 2025. This indicates potential credit quality deterioration within its portfolio. Additionally, the Net Asset Value Per Share decreased from $24.43 to $23.65, suggesting a decline in the underlying value of the company's assets.

Analyst Insight

Investors should exercise caution and conduct further due diligence on MidCap Apollo's investment portfolio, specifically investigating the nature and concentration of the realized losses. Consider if the current distribution yield adequately compensates for the increased risk indicated by declining NAV per share and significant realized losses.

Financial Highlights

debt To Equity

1.27

revenue

$74.69M

operating Margin

N/A

total Assets

$933.99M

total Debt

$511.50M

net Income

$24.12M

eps

$23.65

gross Margin

N/A

cash Position

$14.02M

revenue Growth

0.03%

Revenue Breakdown

Key Numbers

• $24.12M — Net Increase in Net Assets from Operations (9M 2025) (Decreased from $32.62M in 9M 2024, indicating reduced operational profitability.)
• $10.09M — Net Realized Losses on Investments (9M 2025) (Significantly increased from $18K in 9M 2024, highlighting portfolio underperformance.)
• $402.91M — Total Net Assets (Sept 30, 2025) (Increased from $364.53M at Dec 31, 2024, primarily due to capital raises.)
• $23.65 — Net Asset Value Per Share (Sept 30, 2025) (Decreased from $24.43 at Dec 31, 2024, reflecting a decline in per-share value.)
• $50.00M — Net Proceeds from Issuance of Common Shares (9M 2025) (Contributed to the increase in total net assets, despite operational challenges.)
• $511.50M — Debt (Sept 30, 2025) (Decreased from $573.52M at Dec 31, 2024, indicating debt reduction.)
• $14.02M — Cash and Cash Equivalents (Sept 30, 2025) (Decreased from $33.28M at Dec 31, 2024, suggesting reduced liquidity.)
• $2.39M — PIK Interest Income (9M 2025) (Increased from $1.20M in 9M 2024, contributing to investment income but not cash flow.)

Key Players & Entities

• MidCap Apollo Institutional Private Lending (company) — Registrant
• $24.12 million (dollar_amount) — Net increase in net assets from operations for nine months ended September 30, 2025
• $32.62 million (dollar_amount) — Net increase in net assets from operations for nine months ended September 30, 2024
• $74.69 million (dollar_amount) — Total investment income for nine months ended September 30, 2025
• $74.44 million (dollar_amount) — Total investment income for nine months ended September 30, 2024
• $10.09 million (dollar_amount) — Net realized losses on investments for nine months ended September 30, 2025
• $18 thousand (dollar_amount) — Net realized losses on investments for nine months ended September 30, 2024
• $402.91 million (dollar_amount) — Total Net Assets as of September 30, 2025
• $23.65 (dollar_amount) — Net Asset Value Per Share as of September 30, 2025
• $24.43 (dollar_amount) — Net Asset Value Per Share as of December 31, 2024

FAQ

Risk Factors

• Increased Realized Losses [high — financial]: The company experienced net realized losses on investments of $10.09 million for the nine months ended September 30, 2025, a substantial increase from $18,000 in the prior year period. This indicates significant underperformance in the investment portfolio.
• Declining Net Asset Value Per Share [medium — financial]: Net asset value per share decreased to $23.65 as of September 30, 2025, from $24.43 at December 31, 2024. This decline, despite an increase in total net assets, suggests that capital raises are not fully offsetting underlying portfolio performance issues.
• Reduced Liquidity [medium — financial]: Cash and cash equivalents decreased to $14.02 million from $33.28 million over the nine-month period. This reduction in liquidity could limit the company's ability to make new investments or meet short-term obligations.
• Reliance on PIK Interest [medium — financial]: PIK interest income more than doubled to $2.39 million from $1.20 million. While this boosts investment income, it does not provide immediate cash flow and can mask underlying credit issues.
• Interest Rate Sensitivity [medium — market]: As a private lending company, MidCap Apollo is exposed to interest rate fluctuations. Changes in market interest rates can affect the value of its investments and its borrowing costs.
• Regulatory Compliance [low — regulatory]: The company operates in a regulated financial environment. Changes in regulations related to private lending, capital requirements, or investor protection could impact its operations and profitability.

Industry Context

MidCap Apollo Institutional Private Lending operates in the private credit market, a sector characterized by direct lending to companies, often those underserved by traditional banks. The industry is experiencing growth driven by demand for flexible financing solutions, but it is also sensitive to interest rate changes and credit market conditions. Competition is increasing from various financial institutions and specialized funds.

Regulatory Implications

As a financial services entity, the company is subject to evolving regulatory frameworks. Changes in capital requirements, lending standards, or reporting obligations could impact its operational costs and strategic flexibility. Compliance with securities laws and investment advisor regulations is paramount.

What Investors Should Do

1. Monitor Realized Losses
2. Analyze Cash Flow Generation
3. Evaluate NAV Per Share Trend
4. Assess Debt Reduction Effectiveness

Key Dates

• 2025-09-30: End of Nine Months Reporting Period — Key period for evaluating operational performance, investment gains/losses, and balance sheet changes.
• 2025-09-30: Consolidated Statements of Assets and Liabilities Filed — Provides a snapshot of the company's financial position, including total assets, liabilities, and net assets.
• 2025-09-30: Consolidated Statements of Operations Filed — Details the company's investment income, operating expenses, and net increase in net assets for the period.
• 2025-09-30: Consolidated Statements of Cash Flows Filed — Outlines the sources and uses of cash during the nine-month period, crucial for assessing liquidity.

Glossary

PIK interest income

Payment-in-Kind interest income, where interest is paid in the form of additional debt or equity rather than cash. (Increased significantly, boosting reported income but not cash flow, potentially masking underlying credit issues.)

Net Asset Value (NAV) Per Share

The market value of a company's assets minus its liabilities, divided by the number of outstanding shares. (Decreased, indicating a decline in the per-share value of the company's holdings despite capital raises.)

Debt (net of deferred financing costs and unamortized original issue discount)

The total amount borrowed by the company, adjusted for costs associated with issuing the debt and any discount from the face value. (Decreased, showing a reduction in leverage, but still represents a significant portion of the company's capital structure.)

Capital in excess of par value

The amount received from issuing common stock above its nominal par value. (Increased substantially, reflecting proceeds from common share issuances.)

Accumulated under-distributed (over-distributed) earnings

The cumulative net income or loss of the company that has not yet been distributed to shareholders. (Remained negative, indicating that distributions have exceeded earnings on a cumulative basis.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, MidCap Apollo Institutional Private Lending saw a slight increase in total investment income to $74.69 million, largely due to a near doubling of PIK interest income. However, this was overshadowed by a dramatic surge in net realized losses on investments, which reached $10.09 million, leading to a lower net increase in net assets from operations. Total net assets grew significantly due to common share issuances, but net asset value per share declined, and liquidity, as measured by cash and cash equivalents, decreased substantially.

Key Financial Figures

• $0.001 — s common shares of beneficial interest, $0.001 par value, ("Common Shares"). The num

Filing Documents

• ck0002006758-20250930.htm (10-Q) — 15992KB
• ck0002006758-ex31_1.htm (EX-31.1) — 15KB
• ck0002006758-ex31_2.htm (EX-31.2) — 15KB
• ck0002006758-ex32.htm (EX-32) — 10KB
• 0001193125-25-274253.txt ( ) — 46130KB
• ck0002006758-20250930.xsd (EX-101.SCH) — 1818KB
• ck0002006758-20250930_htm.xml (XML) — 9475KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements 1 Consolidated Statements of Assets and Liabilities as of September 30, 2025 (Unaudited) and December 31, 2024 1 Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and September 30, 2024 (Unaudited) 2 Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2025 and September 30, 2024 (Unaudited) 3 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and September 30, 2024 (Unaudited) 4 Consolidated Schedule of Investments as of September 30, 2025 (Unaudited) 5 Consolidated Schedule of Investments as of December 31, 2024 28

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 46 Report of Independent Registered Public Accounting Firm 74 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 75 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 85 Item 4.

Controls and Procedures

Controls and Procedures 86

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 87 Item 1A.

Risk Factors

Risk Factors 87 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 87 Item 3. Defaults Upon Senior Securities 87 Item 4. Mine Safety Disclosures 87 Item 5. Other Information 87 Item 6. Exhibits 88

Signatures

Signatures 89 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION In this report, the terms the " Company ," " we ," " us ," and " our " refer to MidCap Apollo Institutional Private Lending unless the context specifically states otherwise.

Consolidated Financial Statements

Item 1. Consolidated Financial Statements MIDCAP APOLLO INSTITUTIONAL PRIVATE LENDING CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (In thousands, except share and per share data) September 30, 2025 December 31, 2024 (Unaudited) Assets Investments at fair value: Non-controlled/non-affiliated investments (cost $ 912,822 and $ 918,595 , respectively) $ 899,528 $ 909,845 Non-controlled/affiliated investments (cost $ 7,217 and $ 0 respectively) 6,998 — Cash and cash equivalents 14,015 33,276 Foreign currencies (cost $ 1,002 and $ 711 , respectively) 1,002 678 Receivable for investments sold 1,232 8,607 Interest receivable 11,172 5,399 Unrealized appreciation on foreign currency forward contracts 38 — Total assets $ 933,985 $ 957,804 Liabilities Debt (net of deferred financing costs and unamortized original issue discount of $ 7,951 and $ 5,150 as of September 30, 2025 and December 31, 2024, respectively) $ 511,496 $ 573,522 Payable for investments purchased 84 — Management fees payable 504 — Performance-based incentive fees payable 827 — Distributions payable 12,779 13,169 Interest payable 2,639 3,256 Accrued administrative services expense payable 270 1,414 Other liabilities and accrued expenses 2,474 1,916 Total liabilities $ 531,073 $ 593,277 Commitments and contingencies (Note 8) Total Net Assets $ 402,912 $ 364,527 Net Assets (Note 6) Common shares, $ 0.001 par value ( Unlimited shares authorized; 17,038,441 shares issued and outstanding as of September 30, 2025 and 14,922,603 shares issued and outstanding as of December 31, 2024) $ 17 $ 15 Capital in excess of par value 408,769 375,365 Accumulated under-distributed (over-distributed) earnings ( 5,874 ) ( 10,853 ) Net Assets $ 402,912 $ 364,527 Net Asset Value Per Share $ 23.65 $ 24.43 See notes to the consolidated f

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