AFC Gamma (0FG) Q2 2026 Earnings Report

The call conveyed constructive operational progress: NAV increased, share repurchases were accretive, portfolio yield remains attractive (13.2%), liquidity is ample (~$106.5M cash and >$70M deployable), and the company is actively redeploying into non-cannabis lower middle market opportunities (1.3B pipeline). Offsetting these positives are concentrated legacy cannabis non-accruals (including an active default and foreclosure), a quarter-over-quarter dip in reported investment income due to Q1 episodic exit fees, and originations that were lumpy and slower in Q2. Management has made tangible progress on legacy recoveries (Devi and DMA) and improved post-quarter leverage via revolver repayments, which supports a cautiously optimistic outlook.

Management guided that they remain focused on redeploying capital into the lower middle market where they see attractive, disciplined opportunities, noting a $1.3 billion pipeline and ~$102 million of YTD new commitments while cautioning originations will be lumpy; they said they have ample capacity to act with over $70 million of deployable liquidity, $106.5 million of cash and cash equivalents, and the ability to co‑invest or syndicate larger transactions. Key Q2 metrics cited include NAV of $8.25 (+$0.35 q/q) with net assets of $187.3 million and total assets of $399.7 million, principal outstanding of $364.5 million across 17 loans, portfolio fair value $290 million, 100% senior‑secured first‑lien positioning and a weighted‑average yield (ex‑nonaccruals) of 13.2%; operating results were $8.7 million of total investment income and $3.5 million of net investment income ($0.15/share), providing 3x coverage of the $0.05/share distribution. Balance‑sheet and capital‑management metrics highlighted: $207 million of debt outstanding ( $110M secured revolver, $20M unsecured revolver, $77M senior notes) at a 6.3% weighted average rate, debt/equity 1.1x, net debt/equity 0.53x, asset coverage 190% (vs 150% requirement), Q2 buybacks of ~$2.8M (839k shares at $3.29; $0.17 NAV accretion) with $2.2M remaining under the $5M program. Management reiterated focus on cash‑flowing borrowers with $5M–$50M EBITDA, continued resolution of legacy cannabis non‑accruals (Devi sale for $12.5M with $2M deposit and ~80% participation; $58M principal repaid to date; DMA asset sales closed; Justice Grown in foreclosure), and a stated intermediate leverage target around 1.0x.