•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
CION Investment Corp. reported lower first-quarter 2026 earnings, citing reduced transaction activity, lower dividend income and higher interest expense. Management said the quarter’s weakness is largely separate from the underlying performance of its portfolio.
The business development company reported net investment income of $12.9 million, or $0.25 per share, compared with $18.3 million, or $0.35 per share, in the fourth quarter. Total investment income fell to $49.5 million from $53.8 million in the prior quarter.
Co-Chief Executive Officer Mark Gatto said the quarter was “not our strongest” on a headline basis, but argued the drivers were nuanced. He said the shortfall versus the company’s monthly base distributions of $0.30 per share for the quarter was mainly due to lower transaction fees from reduced repayment and investment activity, lower dividend income and higher interest expense tied to recent refinancing activity.
“We believe that the underlying earnings capacity of our portfolio remains intact, and we remain optimistic about the trajectory from here,” Gatto said.
CION’s net asset value declined 4.7% during the quarter to $13.11 per share from $13.76 at year-end. Management attributed the drop primarily to unrealized mark-to-market decreases in the portfolio and the company under-earning its distributions during the quarter. Chief Financial Officer Keith Franz said the decline was partially offset by the accretive effect of share repurchases.
Gatto said more than 80% of the downward movement in portfolio marks was unrealized and driven by market-level factors, including movements in comparable public company valuations and broader credit spread widening, rather than fundamental credit deterioration at portfolio companies.
Management also addressed scrutiny of private credit valuations. Gatto said CION uses four independent third-party valuation providers and that the “vast majority” of the portfolio is subject to full independent review each quarter. He added that third-party macro assumptions and market inputs can sometimes produce marks that do not fully reflect the credit fundamentals of individual positions.
CION said software represented 1.8% of portfolio fair value at quarter-end. Gregg Bresner, President and Chief Investment Officer, said CION had three software portfolio companies and “no ARR loans” in the portfolio, adding that the company has historically avoided software lending based on recurring-revenue growth methodologies when companies had negative EBITDA at closing.
Management described portfolio credit performance as stable despite broader concerns about stress in private credit. Gatto said weighted average interest coverage across the debt portfolio was 2.08x, while weighted average net leverage was 4.62x, essentially flat from 4.7x in the prior quarter.
Non-accruals improved to 1.53% of fair value as of March 31, down from 1.78% in the fourth quarter. On an amortized cost basis, non-accruals rose to 5.35% from 4.32%. CION added Lux Credit Consultants to non-accrual status during the quarter, but management said the company was sold after quarter-end and is expected to be removed from non-accrual in the second quarter.
Bresner said the first-lien portion of the portfolio remained central to CION’s defensive positioning, with approximately 81% of the portfolio in first-lien investments. Approximately 98% of the portfolio was risk-graded three or better at quarter-end.
CION made approximately $69 million in investment commitments during the first quarter across two new and nine existing portfolio companies, of which $54 million was funded. The company also funded $12 million of previously unfunded commitments. Sales and repayments totaled $38 million, including full repayment of first-lien holdings in IMW and The Men’s Wearhouse. Net funded investments increased by about $28 million during the quarter.
New portfolio companies included Anchor QEA and Dependable Acquisition, described by Bresner as specialty business service providers. Add-on investments and secondary purchases were made in existing portfolio companies including American Clinical, Carestream Health, Coinmach, David’s Bridal, HealthWay, Juice Plus+, STAT-MED, Stengel Hill and WorkGenius.
Bresner said CION remained selective in new originations, citing credit and pricing considerations. He said new-issue market pricing reflected substantial private debt fundraising in 2024 and 2025, resulting in lower coupon spreads, higher leverage and looser credit documents. The weighted average yield for new direct first-lien investments during the quarter was equivalent to SOFR plus 6.1%, based on investment cost.
The company also highlighted unrealized valuation declines in Lux Credit, FuseFX, Labgear, SIMR Statin Med and the common equity of David’s Bridal. Bresner said some other investments, including Longview Power, Hollander, TriMark, Avison Young and Nova Compression, saw mark increases due to stronger performance and outlook.
At March 31, CION had total assets of approximately $1.8 billion, net assets of $660 million, total debt outstanding of $1.2 billion and 50.3 million shares outstanding. The portfolio at fair value was $1.7 billion. The weighted average yield on debt and other income-producing investments at amortized cost was 10.4%, down from 10.7% in the fourth quarter.
Franz said the company ended the quarter with more than $100 million in cash and short-term investments and another $100 million available under credit facilities. Approximately 75% of debt capital was unsecured and 25% was senior secured bank debt. About 60% of debt capital was floating rate.
Net debt to equity increased to 1.62 times from 1.44 times at year-end. Franz said the increase reflected the decline in NAV and higher average debt outstanding during the quarter. The weighted average cost of debt capital was 7.52%, slightly higher than in the fourth quarter.
During the quarter, CION issued $135 million of 7.5% senior unsecured notes due 2031, which trade on the New York Stock Exchange under the ticker CICC. A portion of the proceeds was used to repay $100 million under the company’s JPMorgan credit facility at the end of March.
Franz said the company’s leverage target is around 1.30 to 1.35 times, though he acknowledged CION is currently above that range. He said the company expects to use portfolio sales, repayments and refinancing activity to reduce leverage “over the next couple of quarters.”
CION repurchased approximately 1.1 million shares during the quarter at an average price of $8.71. Gatto said management believes current prices offer an opportunity to repurchase shares at a meaningful discount to fair value while also seeking to reduce leverage.
The company paid monthly base distributions totaling $0.30 per share during the first quarter and declared third-quarter base distributions totaling $0.30 per share, payable at $0.10 per share per month in July, August and September.
CION Investment Corporation is a closed-end, non-diversified management investment company organized as a business development company under the Investment Company Act of 1940. Externally managed by CION Investment Management, LLC, the firm provides flexible capital solutions to U.S. and Canadian middle-market companies. By combining debt and equity financing, CION seeks to support growth, acquisitions, recapitalizations and other strategic initiatives for its portfolio companies. The company’s investment strategy centers on senior secured loans, subordinated debt and private equity interests.
Premium gym chains are entering a “golden era” that is ending or already in decline, as rising operating costs collide with shifting consumer preferences toward more flexible, community-based ways to exercise. Long-term memberships are shrinking, margins are pressured by higher rents and facility expenses, and competition from smaller, more personalized…
