Prospect Capital (NASDAQ:PSEC) reported a decline in net investment income per share (GAAP) to $0.17 in Q4 FY2025, down 32.0% from the previous year. Net income (GAAP) suffered a significant loss of $(0.50) per share. Net asset value per share also fell about 24.9% year over year. Quarterly distributions per share were reduced by 25.0% compared to the previous year. The company highlighted a shift towards less risky assets, resulting in substantial losses, major distribution cuts, and declining asset values, presenting challenges for Prospect Capital.

The composition of Prospect Capital’s portfolio saw a notable shift in the quarter, with a focus on first lien senior secured loans to reduce risk. The company experienced a significant decline in net investment income and a widened net loss, driven by realized losses and fair value adjustments. The net asset value per share dropped by approximately 24.9%, reflecting a decrease in the company’s total assets. Distributions to shareholders were reduced, with new monthly distributions set lower as the company navigates a challenging period.

Looking ahead, Prospect Capital did not provide formal guidance for future earnings or portfolio originations. Monthly distributions were set at $0.045 per share through October 2025. The company’s liquidity position and staggered debt maturities offer support, but declining asset values and recurring earnings power could impact future distributions. With monthly distributions below previous levels, ongoing dividend policy may face scrutiny unless performance improves.

Read more at Nasdaq.: Prospect Capital Posts 32% Income Drop