Participants

Quinlan Abel; Assistant Vice President, Investor Relations; Runway Growth Finance Corp

David Spreng; Chairman of the Board, President, Chief Executive Officer; Runway Growth Finance Corp

Gregory Greifeld; Managing Director, Deputy Chief Investment Officer, Head of Credit; Runway Growth Finance Corp

Tom Raterman; Chief Financial OFficer, Chief Operating Officer; Runway Growth Finance Corp

Melissa Wedel; Analyst; JPMorgan

Casey Alexander; Analyst; Compass Point Research & Trading LLC

Bryce Rowe; Analyst; B. Riley

Vilas Abraham; Analyst; UBS

Mickey Schleien; Analyst; Ladenburg Thalmann & Co. Inc.

Erik Zwick; Analyst; Hovde Group

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Runway Growth Finance first-quarter 2024 earnings conference call. Please be advised that today's conference is being recorded.
I would now like to hand the conference over to Quinlan Abel, Assistant Vice President, Investor Relations. Please go ahead.

Quinlan Abel

Thank you, operator. Good evening, everyone, and welcome to the Runway Growth Finance conference call for the first quarter ended March 31, 2024. Joining us on the call today from Runway Growth Finance are David Spreng, Chairman, President, and Chief Executive Officer; Greg Greifeld, Managing Director, Deputy Chief Investment Officer, and Head of Credit of Runway Growth Capital; and Tom Raterman, Chief Financial Officer and Chief Operating Officer.
Runway Growth Finance's first-quarter 2024 financial results were released just after today's market close and can be accessed from Runway Growth Finance's Investor Relations website at investors.runawaygrowth.com. We have arranged for a replay of the call at the Runway Growth Finance webpage.
During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including and without limitation, market conditions caused by uncertainties surrounding rising interest rates, changing economic conditions, and other factors we identified in our filings with the SEC.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate. And as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements.
The forward-looking statements contained on this call are made as of the date hereof and Runway Growth Finance assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of SEC related filings, please visit our website.
Before we begin, on behalf of the company, we are thrilled to welcome back David Spreng as he assumes full responsibility as Chairman, President, and Chief Executive Officer of Runway Growth Finance. And with that, I will turn the call over to David.

David Spreng

Thank you, Quinlan, and thank you, everyone, for joining us this evening to discuss our first-quarter results. I want to thank all of those who reached out for their support during my recovery process. Further, I'd like to thank Greg, Tom, and the entire Runway team for their collaboration in navigating the dynamic macroenvironment over the last several months.
To start, I'll provide some first quarter portfolio highlights, then an overview of our financial results, and finally discuss the current market trends that we're observing during the first quarter, runway saw heightened pipeline activity and completed two investments in new and existing portfolio companies representing $25 million in funded loans run rate delivered total investment income of 40 million and net investment income of $18.7 million in the quarter. These figures both represent an increase of approximately 2% from the prior year period. Our weighted average portfolio risk rating increased slightly in Q1, which Tom will provide more details on shortly. We're very focused on credit quality and believe in working closely with all of our portfolio companies throughout the entire lifetime of our loans. This belief drives our monitoring philosophy and is the foundation for preserving credit quality. Consistent communication with our borrowers enables us to accurately market investments and mitigate potential risk while maintaining consistent yield.
Turning now to the market. In our view, companies are increasingly exploring the use of debt has a minimally dilutive alternative to equity financing, which bodes well for us as a preferred partner known for sophisticated financing solutions that meet borrowers' diverse needs as the economy improves resilient with expectations for a soft landing. We believe our low leverage ratio and ample dry powder position us well to take advantage of opportunities that meet our high credit bar. Our role as a lender to support the best companies with high conviction to reach their full growth potential. We are not a lender of last resort to provide funding during a crisis or a troubled situation in fact, we are often the last capital brought in before a company executes a strategic exit like an M&A transaction or IPO. And that point remains critical for us as an investor. I've spent nearly three decades sourcing, evaluating and deal-making in the venture ecosystem prior to founding runway. Nearly nine years ago, I was a venture capitalist for over 20 years. My experience across economic cycles and rate environments underscores the importance of underwriting rigor in the current market. We are seeing more venture-backed companies seeking capital than ever before further that each companies have a difficult fundraising backdrop, has them all over the possibility of down rounds and seek non-dilutive capital. We know this may sound counterintuitive given the quantum of VC dry powder, but it's important to remember that many of these companies last raised money at record valuations and now want to preserve a functioning cap table for their investors and employees. That is precisely why our focus on selectivity and underwriting standards remain so high. We know that we're not going to bat 1,000 on every loan, but when we have a credit that is pressured our underwriting analysis strives to ensure that future challenges are limited to unforeseen external factors. These may include changes in market conditions or shifts in an operating environment as opposed to loosened underwriting standards, a poorly structured loan is far more than just a challenge for that one borrower in a portfolio. It requires more time from a lender's team put stress on the ability to monitor other names in the portfolio and ultimately impacts of portfolios.
Earnings power. I want to be clear, we currently have two names on nonaccrual and we're working towards favorable outcomes for our shareholders there. That said, we're not going to adjust our underwriting standards to accelerate portfolio growth that minimizes the impact of these credits in the near term. Instead we aim to preserve our ability to serve the broader portfolio and deliver value for our shareholders through disciplined underwriting. We've been investors and operators for a long time, and we have a strong idea of what is ahead of us. We are confident in our ability to source originate and underwrite deals that are up to our standards in the coming year. Further we have a line of sight on our ability to preserve earnings power and ensure our shareholders. You can expect consistent distributions for the foreseeable future. Our selectivity is what will fund our future dividends in the years to come. And we are optimistic about the opportunities we're evaluating that we expect to manifest in the latter half of the year. We remain committed to delivering value to our shareholders, which is a direct result of the strength of our portfolio.
With that, I'll turn it over to Greg.

Gregory Greifeld

Thanks, David. I want to further expand on our view of the current operating environment and runway and strategic positioning in the market. In our view, U.S. economic resilience is by far the most important macro story of recent quarters. In large part, we have seen that resilience firsthand through our portfolio companies. U.s. late-stage venture equity represented 52% of total deal value and 31% of total deal count, marking the strongest quarterly figures we've seen to date, while overall venture activity remains depressed after years of strong fundraising have resulted in well over $300 billion in dry powder waiting to be deployed. We believe runways value proposition amid the current market backdrop remains clear, companies will continue to seek minimally dilutive capital to extend runway and supplement equity this is bearing out and the opportunities we're seeing. As David mentioned, we have seen more pipeline activity in the first quarter than historical levels. Our business model remains compelling to borrowers seeking growth capital in this current market, we are focused on the fastest growing sectors of the economy. We know best, which include life sciences, technology and select consumer service and product industries. While few deals of our target check size met our consistent high standards in the first quarter, we are confident in our ability to selectively deploy capital at favorable terms. When the market becomes more lender friendly in the second half of this year.
We remain committed to upholding our credit first philosophy as an organization, and we are proud of the team's diligence in evaluating these opportunities while actively managing our portfolio. In parallel further, we are increasing the avenues we have to evaluate and see more deals. As discussed on our last call we are pleased to announce our newly formed joint venture with Kadmon Capital Partners, a credit financing platform for the venture ecosystem that was established in 2023 by Apollo runway Cardinal one LLC is an equal partnership between runway and Kadmon that will focus on financing private and sponsored late and growth stage companies. We look forward to the incremental deal flow we expect to result from this partnership and have already been encouraged by the discussions that are taking place. While selectivity remains at the forefront, we are actively pursuing more opportunities to source attractive investments and evaluate attractive deals in the industries we know best.
With that, I will now turn it over to Tom.

Tom Raterman

Thank you, Greg, and good evening, everyone. During the first quarter of 2024, we saw heightening pipeline activity and executed on investments that demonstrate our disciplined lending strategy. We completed two investments in the first quarter, representing $25 million in funded loans. Our weighted average portfolio risk rating increased to 2.44 in the first quarter from 2.39 in the fourth quarter of 2023. Our rating system is based on a scale of one to five or one represents the most favorable rating quarter over quarter. Change in our internal portfolio risk rating resulted from three investments, which each declined one category from their Q4 2023 ratings of category to three and four two ratings of category three, four and five, respectively, category five investment is mingled Healthcare, which continues to be on nonaccrual. In line with previous quarters, we calculated the loan to value for loans that were in our portfolio at the end of the fourth quarter and at the end of the current quarter in comparing this consistent grouping of loans on a like-to-like basis, we found that our dollar weighted loan to value ratio improved slightly from 27.6% to 26% sequentially. Our total investment portfolio had a fair value of approximately $1.02 billion, excluding treasury bills a decrease of 1% from $1.03 billion in the fourth quarter of 2023 and a decrease of 10% from $1.13 billion for the comparable prior year period. Our portfolio continues to be concentrated in first-lien senior secured loans as of March 31st, 2024, when we had net assets of $529.5 million, decreasing from $547.1 million at the end of the fourth quarter of 2023. Nab per share was $13.36 at the end of the first quarter compared to $13.50 at the end of the fourth quarter of 2023 our Q1 2024 investor presentation includes a detailed math bridge for the quarter. Approximately $0.045 of the decline in NAV per share arose from our equity investments including warrants. We're the largest equity investment impact was the write-down of our equity holdings in cogeneration, which was received in conjunction with the sale of our former portfolio company identity, approximately $0.125 of the unrealized loss was attributable to changes in the value of certain debt investments, the most significant of which was the mark down of our debt investments and staggered job amounting to approximately $2.9 million or $0.07 per share. As a reminder, our loan portfolio is comprised of 100% floating rate assets, all loans are currently earning interest at or above agreed upon interest rate floors, which generally reflect the base rate plus the credit spread set at the time of closing or signing the term sheet. In the first quarter, we received 34.5 million in principal repayments, a decrease from 63.4 million in the fourth quarter of 2023 this is a result of our credit first approach to investing that prioritizes the highest quality sponsored and non-sponsored companies, which are often ideal candidates for refinancing or acquisition in most markets, this level of repayments indicates that our portfolio is performing as we expected and fits within our stated investment criteria on April 26th, 2024, our loan to turning tech intermediate also known as eco three 60 was repaid in full. As discussed during our fourth quarter earnings call earlier this year, we expect additional prepayment activity throughout the year with activity building significantly in the second half of 2024. We believe prepayment activity provides runway with liquidity to deploy in a manner that is fully accretive, increased prepayments and an uptick in M&A activity enable us to reinvest and attractive opportunities in them. We generated total investment income of 40 million and net investment income of 18.7 million in the first quarter of 2024 compared to 39.2 million and 18.3 million in the fourth quarter of 2020. Our debt portfolio generated a CAD weighted average annualized yield of 17.4% for the fourth quarter of 2024 as compared to 16.9% for the fourth quarter of 2023 and 15.2% for the comparable period last year.
Moving to our expenses for the first quarter, total operating expenses were $21.3 million, up 2% from $20.9 million for the fourth quarter of 2023. Runway recorded a net unrealized loss on investments of 6.6 million in the first quarter compared to a net unrealized loss of $5.9 million in the fourth quarter of 2023. We had no realized loss in the first quarter compared to a net realized loss of 17.2 million in the prior quarter, and we remain confident that our highly selective investment process and diligent monitoring of portfolio companies support our track record of maintaining low levels of nonaccruals, coupled with generally healthy credit performance. As of March 31st, 2024, we had two loans on nonaccrual status. Our loan to mingle Healthcare represents outstanding principal of 4.3 million and a fair market value of $3.2 million. And our loans to snag a job represent outstanding principal of 42.3 million and a fair market value of 35.5 million. These loans represent 3.8% of the total investment portfolio at fair value in the first quarter of 2024, our leverage ratio and asset coverage were 0.91 and 2.09 times respectively, compared to 0.95 and 2.05 times at the end of the fourth quarter.
Turning to our liquidity. At March 31st, 2024, our total available liquidity was $319.9 million, including unrestricted cash and cash equivalents. We had borrowing capacity of $313 million, reflecting an increase from $281 million and $278 million, respectively on December 31st, 22. At quarter end, we had unfunded loan commitments to portfolio companies of $235.8 million. The majority of which were subject to specific performance milestones. 42 million of these commitments are currently eligible to be funded. During the quarter, we experienced two prepayments totaling 34.5 million and scheduled amortization of 0.4 million. Prepayments included a partial principal repayment of our senior secured term loan to fiscal note for $27.4 million and a partial principal repayment of our senior secured term loan to Marley Spoon for $7.1 million.
As mentioned on our previous earnings call in 2023, our Board of Directors approved a stock repurchase program, giving us the ability to acquire up to 25 million of runways common stock. In the first quarter, the Company repurchased approximately 887,000 shares under the program, which expires on November second, 2024.
And finally, on April 30th, 2024, our Board declared a regular distribution for the first quarter of $0.4 per share as well as a supplemental dividend of $0.07 per share payable with the regular dividend. We're confident that through our prepayment fees and spillover income, we will have no difficulty covering our dividend in the foreseeable future.
With that, operator, please open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) Melissa Wedel, JPMorgan.

Melissa Wedel

Good afternoon. Thanks for taking my questions today. And first, David, it's great to hear you again. Welcome back. I wasn't sure if I missed this. I know that you talked about seeing an increasing pipeline during the first quarter. I think part of that was related to the Tasmar JV. Did what did you give a specific amount of activity that you've seen in 2Q to date?

David Spreng

Hi, Melissa, thanks very much, and it is great to be back at. I think the words and we are on new where heightened pipeline activity and I know that sounds pretty nebulous in a way it is because to be a little more concrete. Our actual number of deals is pretty flat to what it was last year, the volume of opportunities is pretty flat, but we think that it's a higher quality than others over the last 12 months. There's been such a high level of disarray in the venture community. And so many companies struggling to figure out how they're going to continue to operate that. We've seen a lot of opportunities that really just don't meet our standards so we've been pretty harsh in cutting things off currently, and we are pretty far along on several deals that I think will close quite soon. And the visibility that we have on other stuff just looks really encouraging. So I can say with a really high level of confidence that you're going to see us starting to do more deals. I don't know how far we'll get caught up relative to the goal for the entire year, but it's going to accelerate quite a bit.

Melissa Wedel

Okay. I appreciate that additional contact and I was hoping you could also walk us through snag a job and that you know what we understand that when something goes on nonaccrual and there can be a lot of avenues and different pathways to resolution. Could you help us understand sort of the nature of of this one and share? Any details any time line or any any thoughts that you're able to appreciate it?

David Spreng

Yes, of course, I'll turn it over to Greg too.

Gregory Greifeld

Yes, I'm Melissa. So snag jobs is a company that is undergoing a number of headwinds that you're seeing with a number of their peers for verse of public and private. It's a fluid situation where we're very actively involved with the management team with the equity sponsors. And additionally, we have engaged we have a bench of operating partners where we have called one of them in to help us deal with the situation. So it is something that we are intimately involved with on a weekly, if not daily basis and are working to have the best outcome in the right timeframe for all constituents.
But definitely our investors first and foremost, understood and is that because of the fluid nature of the situation, I take it to mean that that that's one where it's harder to have a sense on time line and ultimate pathway.
I think that's definitely fair. We're continuing to evaluate in concert with the management and sponsors all different avenues available to us, which you know, are changing in order to accurately reflect that uncertainty. We have put it on nonaccrual, but it is one. We do believe that there are a number of paths and different outcomes ahead of us that that can still have a favorable outcome.

Melissa Wedel

Okay. Thank you.

Operator

Casey Alexander, Compass Point Research & Trading.

Casey Alexander

Yes, hi. Good afternoon and thanks for taking my questions. Runways and David, welcome back. It is nice to have you back.
My question is can you kind of explain the rationale for even having a JV when the Company has been public for about 2.5 years now and only in one quarter has the leverage ratio exceeded one time and that was at 1.02 times. I mean, the company has been distantly under underleveraged. So what's the rationale for having a JV?

David Spreng

Yes, I think Thanks, Casey. And it's a it's good to hear your voice as well. I'll turn it over to Tom because our

Tom Raterman

Thanks, David. Thanks, Casey, for the question. So as you look at our remaining capacity it's about to get up to that 1.2 times or about 175 to 200 million, which is just a handful of deals. It's five to six deals. Our target hold for the BDC is in that 35 to $40 million range. Yet as we think about and where we're positioning and want to position the portfolio and our in our your target, our target market set later stage, which tends to be a slightly larger deal, which would be in that 50 to 75 million range. So it allows us to continue to participate in that risk sector that we want while at the same time, not overextending our desired hold and maintaining diversification in the portfolio.

Casey Alexander

Thank you. That's my only question.

Operator

Bryce Rowe, B. Riley.

Bryce Rowe

Six bench of David. Good to good everybody. I'm good to hear your voice.
You're welcome. Steve, wanted to know I wanted to maybe just trying to help us calibrate the prepayment or the visibility of the kind of the prepayment activity that you see coming here in the balance of the year? And then maybe a related question would be trying to size up the pipeline relative relative to that prepayment activity and weather do you think we'll see kind of net growth for the for the balance of the year?

David Spreng

Yes, Bryce, thanks and great to hear your voice, and I'll turn it over to Tom, after just making a few comments. And the first is the common response. Every every time you said, it's almost impossible to forecast prepayments. And but we know when they come that we just have to run that much faster on the origination side and that for companies that we want to keep in the portfolio, we'll do whatever we can. Sometimes that's impossible when when a portfolio company goes public and has hundreds of millions of dollars of cash on the balance sheet or repaired situations where JPMorgan was the lead underwriter and offer them a line of credit at 500 basis points below our cost. So sometimes you just can't defend against it. And but there are other times where we welcome the repayment so that we can redeploy that capital in today's more attractive environment.
So I guess my bottom-line answer to your question is we don't exactly know what prepayments will be, but whatever they are we're going to insure and to the best of our ability that there are net positive new deployments and significant ones for the year.

Tom Raterman

It's hard to just to add a little to that. We know looking forward that we've got some component of scheduled amortization. We have a couple of transactions that mature. And then we know that we've got a handful of companies that are in some sort of sort of process now as you pace those out and think about when that happens, those will likely come mid to end of Q3 and then be more back-end weighted in Q4 at the same time, that's where we see the origination momentum building. I think second quarter will be closer to net originations will be flat, maybe slightly up, but we'll start seeing that flywheel process building into quarters three and four, and we'll see a greater net originations so that we can replace the earnings power in the long term from those prepayments. In the short term, we would anticipate a fair amount of accelerated income as a result of prepayment fees and some OID. in in quarters three and four cap.

Bryce Rowe

Okay. That's helpful. And maybe a couple of more for me. Tom, you talked about being comfortable with the with the dividend coverage and I assume that to mean kind of the all-inclusive dividend with the base and the spillover I'm sorry, the supplemental, can you can you can you kind of help quantify where spillover is at this point.
And then my second question would probably also be for you, Tom, just in terms of buyback and buyback activity, nice to see it in the quarter. It looks like you continued that subsequent to quarter end? And was curious kind of what the what the average price was for the second quarter purchases and just where the appetite is from a pricing perspective there? Thanks.

Tom Raterman

Well, let me answer the first part of that well to speak to the dividend first, certainly, we would we would like to continue the supplemental dividend I think as we look at what we know today with the current spillover pool and what we anticipate going forward and in prepayments, we ought to be able to maintain that through the year. Obviously, our biggest priority is maintaining the base dividend. And so we're always going to want to keep adequate spillover. Should we see a quarter where we get a lot of loan maturities that are close or prepayments that are close to maturity. So you don't have a lot of accelerated OID or prepayments income. So we want to keep the certainly spillover Kitty in good shape there, as you know, with the with respect to the buyback, we do have a rubric that we established at the beginning of every quarter. We said that once the window is open, we really look at it as a as a percent of NAB and the deeper the discount to now the wider open the faucet is and I think as we start if we're trading at 100% and now obviously that's an admirable accomplishment and it doesn't make any sense to use the repurchase program. What is the discount. It certainly if it's if it's below 90 as we were for a period of time, but we're really looking at to be aggressive. So as and we'll have to see where where the market takes us. And if it's a at a deep discount to NAV and we can continue to be accretive, we'll use the remaining 10, 12 million we have in the repurchase program Oshman.

Bryce Rowe

That's great color. Thank you.

Tom Raterman

You're welcome.

Operator

Vilas Abraham, UBS.

Vilas Abraham

Hey, everybody. Welcome back David, and thanks for the question. Um, just has negative. I appreciate the color there. How much of an impact did that nonaccrual have on Q1 interest income?

David Spreng

It went on nonaccrual at the end of the at the end of the quarter. So the impact's really going forward.

Vilas Abraham

Okay, got it. And then just maybe you could comment on them on the leverage I know you guys have a target range that is pretty wide of 0.8, I think the 1.25. And just how are you thinking about that that really has a wider that is just to capture some of the lumpiness.
And is there going to maybe more of a kind of a truer ideal level you would like to be at over the next couple of years? And can you talk about that at all?

David Spreng

I'm not sure I can. I can take that. We establish that range really at the IPO window and post-IPO, we were at 0.26. So we wanted to give a fairly wide wide range and we want to accommodate a variety of economic circumstances. I think ideally, we want to operate between one and 1.2 and in robust times when deal flow is good and credit conditions are strong. We'll we'll take it up to the upper end of that range. When you've got more uncertainty, we really want to be at the lower end of that range and two to leave dry powder to be opportunistic and to have the ability and Tim to manage any nonaccruals without getting into any kind of valuation issues and being squeezed from a leverage standpoint. But then I think if we map rate between one and 1.2. I think we're really happy with that range.

Vilas Abraham

Okay. I appreciate that. And then just maybe one more on the opportunities that you have a line of sight into for later in the year.
In terms of verticals between tech, life sciences, you have some consumer services and product as well. Is it weighted towards some of those areas more than the others?

David Spreng

I know it's pretty well spread out. I would say that one category that we're leaning into a little less than the others is the consumer stuff, but we continue to find really interesting consumer products and services that are not really affected as much by a recession. And those would be the ones that we would favor. And I would mention Madison Reed is a great example there. And but then on tech and life sciences and we use life sciences to refer to anything healthcare related where we continue to see enormous amount of deal flow and the next deal that will close is probably a life sciences deal. So in between tech and life sciences, it's a it continues to be spread in about the right proportion on. We're more weighted towards Tech, which we're happy with. We like the competitive nature of that market better than the life sciences side and where the returns in tech tend to be a little higher. The competition is a little lower and I don't know if this is the right word, but it feels like it's a little more disciplined where we're able to get covenants and have more appropriate and lower loan to values.

Vilas Abraham

Right. Appreciate it.

David Spreng

You bet. Thank you.

Operator

(Operator Instructions) Mickey Schleien, Ladenburg.

Mickey Schleien

To everyone and David welcome back earnings. However, there have been a lot of comments and discussions about the pipeline and activity. I think it would just be helpful if you could step back for a moment. And just when we're thinking about the backdrop with economic uncertainty, also uncertainty about interest rates is still relatively muted M&A environment, but a lot of private debt capital available. What was your your general thesis on the market and its activity levels, notwithstanding the pipeline, which can be very distinct products?

David Spreng

Yes, I can. And that's an excellent question and one that we grapple with every day. And we tend to err on the side of conservatism because the loans that we're making today will be paying the dividend next year. So it's really, really important that these be good loans. And as I said earlier, the venture ecosystem, it's really bumpy right now and we've never seen so many venture-backed companies according to PitchBook, there's something like 50,000 venture-backed companies. And we know that most of them raised money if they could, during the peak of the market.
And then and then move to AA., I have a path to profitability mode, but so many of them need additional capital. And so many of their VCs are being very stingy with that. And one thing that a lot of people don't pay enough attention to is that the folks that are really driving the pace of this market are the limited partners or institutional investors, the university endowments, the foundations, the state pension funds, all that kind of stuff that the folks that give them money to the VCs are telling their venture partners to slowdown because they have issues at the pension fund level. So until that changes, I don't see VCs getting really, really more liberal with their investments in and taking any of the attention off of the current market, they will continue to bolt load on their best investments, but on the ones that are more marginal and they're they're pretty harsh and just basically set them free and say, yes, go out in the world and survive if you can and if you don't so be it, we've got 40 other portfolio companies that will hopefully make up for it. So and it's a it's just really a choppy environment, and we've been very conservative. We're really focused on and doing the best we can for our investors in terms of earnings, cash flow and ultimately dividends. And of course, that requires avoiding losses. And I know we've had a couple of things that have gone on to nonaccrual, which is very unusual for us, and we're in the process of working through those. And I also know that this discussion and the path forward is really about credibility and that and instead of saying words, that mean nothing we're going to deliver. And over the course of this year, hopefully avoid additional losses and fix the problems that we have and then move back into a position of portfolio growth. We're certainly not in this as for growth at any cost. We think that's the wrong way to go about it, and we'd rather build a solid foundation. And so we've been just a little a little slower than we might normally be in. Hopefully that will pay off in the long run.

Mickey Schleien

Thanks for that, David. That's really helpful discussion. And just one follow up sort of a housekeeping question maybe for Tom. So the fund has consistently generated a somewhat small dividend, but I don't see it this quarter. Was that due to the exit of a company or what's their outlook for dividend income?

Tom Raterman

And so we declared our dividend last week at the $0.4 base and the $0.07 supplemental, certainly we don't anticipate any changes to the base. And our objective is to maintain that the supplemental dividend, while not compromising the spillover cushion that we have.

Mickey Schleien

Tom, I was referring to dividend income on the income statement.

Tom Raterman

Oh, okay. So that the dividend income on the income statement came from at CareCloud and in November, that's a public company. We received that equity in the sale of one of our businesses. It was a company called CareCloud and a public company ultimately adopted its name. They suspended that dividend in November, which certainly created a lot of volatility in the valuation on that level one asset. And so the companies indicated that they expect that dividend to resume later this year. And so when CareCloud resumed their dividend, we would expect to see the dividend income come in again.

Mickey Schleien

I understand. That's helpful. That's it for me. This afternoon to thank you for your time as always.

David Spreng

Thanks, Mickey.

Operator

Erik Zwick, Hovde Group.

Erik Zwick

Good afternoon, everyone, and I just want to echo the previous comments that, David, it's truly great to have you back in and hear your voice again. So first question for me, curious you, David, both you and Greg mentioned some optimism for a more friendly lender friendly market in the second half of 24. And I'm curious if you could maybe provide a little more detail or color around any kind of indicators or kind of activity you're seeing now today because that gives you that optimism?

David Spreng

Well, so I'll make a few comments and then turn it over to Greg, but especially on the tech side, we're seeing tons that make a little more sense. And I think you know that we're really big believers in covenants and scanning having appropriately structured loans and that that is starting to come back and especially in the really late stage to learn the deals. We feel that that's where we've always thought that's where the best risk-adjusted returns are. And those companies are now coming to grips with the interest rate environment. And for a long time, there was like, I think, a little bit of sticker shock about the rate of increase in rates, which is very fair. But now companies are understanding the environment that we're going to bring in and that they can afford and maybe there needs to be some adjustments to the budget, but they can afford it. So that that's the main basis for those comments, I will say the life sciences side remains a little bit more competitive and a little bit looser.

Gregory Greifeld

And Harold, Greg, you want to add some additional color and yes, I would definitely echo the sentiments in terms of just a level setting of structure and what the different companies and sponsors are willing to accept. And I'd add onto that, that their own expectations in terms of not only their value of the businesses, but also just the ability to it support amounts of debt has come in quite a bit, too. So opportunities that maybe 18, 24 months ago might have been looking for a certain amount of capital we're seeing does. So same size companies come back to us today, looking for maybe 60% to 70% of that kind of amount, which is much more attractive to us from a loan to value standpoint from other types of attachment points. And we're just seeing a meeting of the minds in terms of what we believe is a reasonable structure as well as what the companies and the sponsors are actually looking.

Erik Zwick

Yes. Thank you. That's helpful. I appreciate some of the commentary there. And then just last one for me. I noticed in this quarter slide deck, you did not include the interest rate sensitivity slide. So maybe kind of two quick questions there. One, I'm guessing that it hasn't changed a whole lot since last quarter, but I'm wondering if you could confirm that and two, because absent there just maybe indicative of your belief that we're going to be at these level of interest rates kind of higher for a longer period? Or just curious around that at that point.

David Spreng

Yes, we definitely we eliminated that slide because it was calculated based on rates going up up to 200 basis points from the current level. And we thought the utility of that was was limited because they didn't concrete we see any increases in rates and our loans have floors that are at a variety of levels. Typically what that was the sulfur rate or the prime rate was at the time, the loan closed plus the spread. So there's no real change in it. We think it's going to be pretty stable as we settle into this higher for longer. It's probably for the better part of this year.

Erik Zwick

And actually, thanks for confirming That's all for me today.

David Spreng

Thanks, Eric.

Operator

Thank you. This concludes our question-and-answer session. I would now like to turn it back to David Spreng for closing remarks.

David Spreng

Thank you, operator. We believe our Lead & Grow stage portfolio is well positioned for any economic environment. We're in a strong position to deploy capital at favorable terms, and we will continue to maintain our underwriting rigor while evaluating future opportunities.
Thank you all for joining us today, and we look forward to updating updating you on our second quarter 2024 financial results in August. Thank you.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.