Finance receivables are reported at their determined principal balances net of any unearned income, cumulative charge-offs and unamortized deferred fees and costs. Unearned income and deferred fees and costs are amortized to interest income based on all cash flows expected using the effective interest method.


	December 31,
	2025		2024
Term loans	$	215,989	$	224,073
Royalty purchases	9,916		64,936
Total before allowance for credit losses	225,905		289,009
Allowance for credit losses	(7,278)		(11,249)
Total carrying value	$	218,627	$	277,760

The allowance for credit losses ("ACL") is management's estimate of the amount of expected credit losses over the life of the loan portfolio, or the amount of amortized cost basis not expected to be collected, at the balance sheet date. This estimate encompasses information about historical events, current conditions and reasonable and supportable economic forecasts. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. Given the current level of economic uncertainty, the complexity of the ACL estimate and level of management judgment required, we believe it is possible that the ACL estimate could change, potentially materially, in future periods. Changes in the ACL may result from changes in current economic conditions, our economic forecast, and circumstances not currently known to us that may impact the financial condition and operations of our borrowers, among other factors.

Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. For finance receivables that do not share similar risk characteristics with other finance receivables, expected credit losses are estimated on an individual basis. Expected credit losses are estimated over the contractual terms of the finance receivables, adjusted for expected prepayments and unfunded commitments, generally excluding extensions and modifications. The loan portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses.

The reserve for unfunded commitments is estimated using the same reserve or coverage rates calculated on collectively evaluated loans following the application of a funding rate to the amount of the unfunded commitment. The funding rate represents management's estimate of the amount of the current unfunded commitment that will be funded over the remaining contractual life of the commitment and is based on historical data. As of December 31, 2025 and December 31, 2024, the Company has a $0.1 million liability for credit losses on off-balance sheet exposures related to unfunded commitments, with this liability included in accounts payable and accrued liabilities on the consolidated balance sheets. Please refer to Note 8 for further information on the Company's unfunded commitments.

During the year ended December 31, 2024, the Company revised its methodology for calculating the allowance for credit losses to be more directly tied to the individual risk ratings, as determined by management, of finance receivables. This resulted in a re-allocation of the existing allowance and did not have a material impact on the total allowance for credit losses amount. Previously, the Company's quarterly assessment of the allowance included two portfolio pools: Term Loans and Royalties. After the change in methodology effective for the quarter ended June 30, 2024, these pools are further broken down into individual risk ratings applied to each investment to allow for a more precise method for calculating the allowance for credit losses.


	December 31, 2025						December 31, 2024
	Term Loans		Royalties		Total		Term Loans		Royalties		Total
Allowance at beginning of period	$	7,158	$	4,091	$	11,249	$	9,731	$	4,170	$	13,901


Provision for (benefit from) credit losses	(1,367)		368		(999)		8,907		(79)		8,828
Write offs, net of recoveries	—		(2,972)		(2,972)		(11,480)		—		(11,480)
Allowance at end of period	$	5,791	$	1,487	$	7,278	$	7,158	$	4,091	$	11,249

On a quarterly basis, the Company evaluates the carrying value of its finance receivables. Recognition of income is suspended, and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. The Company would generally place term loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain and they are 90 days past due for interest or principal, unless the term loan is both well-secured and in the process of collection. When placed on nonaccrual, the Company would reverse any accrued unpaid interest receivable against interest income and amortization of any net deferred fees is suspended. Generally, the Company would return a term loan to accrual status when all delinquent interest and principal become current under the terms of the credit agreement.


	December 31, 2025						December 31, 2024
	Nonaccrual		Performing		Total		Nonaccrual		Performing		Total
Term loans	$	—	$	215,989	$	215,989	$	1,000	$	223,073	$	224,073
Royalty purchases	9,916		—		9,916		13,830		51,106		64,936
Total before allowance for credit losses	$	9,916	$	215,989	$	225,905	$	14,830	$	274,179	$	289,009
Allowance for credit losses	(1,487)		(5,791)		(7,278)		(2,075)		(9,174)		(11,249)
Total carrying value	$	8,429	$	210,198	$	218,627	$	12,755	$	265,005	$	277,760

As of December 31, 2025, the Company had three finance receivables in nonaccrual status: (1) the Flowonix Medical, Inc. (“Flowonix”) royalty, with a carrying value of $5.9 million; (2) the Best ABT, Inc. (“Best”) royalty, with a carrying value of $1.8 million; (3); and the Ideal Implant, Inc. (“Ideal”) royalty, with a carrying value of $2.3 million. The Company collected $3.1 million and $15.9 million on finance receivables in nonaccrual status for the years ended December 31, 2025 and 2024, respectively.

The Company evaluates the carrying value of each finance receivable for impairment. A term loan is considered to be impaired when, based on current information and events, it is determined that the Company will not be able to collect the amounts due according to the loan contract, including scheduled interest payments. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. In certain circumstances, the Company may place a finance receivable on nonaccrual status but conclude it is not impaired. The Company may retain independent third-party valuations on such nonaccrual positions to support impairment decisions. On an ongoing basis, the Company monitors the performance of modified loans to their restructured terms.

On April 10, 2025, the Company completed the sale of the majority of its finance receivables segment royalty portfolio to Soleus Capital (“Soleus”) for approximately $34.0 million in cash ("the Transaction"), which approximated the fair value of those royalties. The amortized cost basis of the royalty portfolio was $37.7 million, inclusive of interest receivables of $2.3 million. As a result of the Transaction, the Company performed a lower-of-cost-or-market analysis in the aggregate resulting in a loss of $3.7 million which is included in the "Gain (loss) on revaluation of finance receivables" caption on the Company's consolidated statements of operations for the year ended December 31, 2025. In conjunction with the closing, the Company's Board of Directors declared a special cash dividend of $4.00 per share, payable to all holders of record of the Company’s common stock as of April 24, 2025, with a payment date of May 8, 2025.

During the year ended December 31, 2024, the Company revalued its royalty for Iluvien as a result of entering into an amendment. Pursuant to the amendment, the forecast of cash flows to be received over the life of the financial royalty was revised resulting in a revaluation gain of $2.5 million and corresponding mark-up to the carrying value which is included in the "Gain on revaluation of finance receivables" caption on our consolidated statements of operations for the year ended December 31, 2024.

The Company evaluates all finance receivables on a quarterly basis and assigns a risk rating based upon management’s assessment of the borrower’s ability and likelihood of repayment. The assessment is subjective and based on multiple factors, including but not limited to, financial strength of borrowers and operating results of the underlying business. The credit risk analysis and rating assignment is performed quarterly in conjunction with the Company's assessment of its allowance for credit losses. The Company uses the following definitions for its risk ratings for Term Loans:

1: Borrower performing well below Company expectations, and the borrower's ability to raise sufficient capital to operate its business or repay debt is highly in question. Finance receivables rated a 1 are on non-accrual and are at an elevated risk for principal impairment.

2: Borrower performing below plan, and the loan-to-value is generally worse than at the time of underwriting. Borrower has limited access to additional capital to operate its business. Finance receivables rated a 2 are generally on non-accrual, and while no loss of impairment is anticipated, there is potential for future principal impairment.

The Company uses an internal credit rating system which rates each Royalty on a color scale of Green to Red, with Green typically indicative of a Royalty that is exceeding base underwritten case, Yellow indicates a Royalty performing in-line with underwritten plan, and Red reflective of underperformance relative to plan. Royalties rated as Red are generally classified as non-accrual.


	December 31, 2025
	2025		2024		2023		2022		2021		Prior		Total
Term Loans
5	$	—	$	29,909	$	25,325	$	19,679	$	16,437	$	—	$	91,350
4	14,675		—		28,992		—		—		—		43,667
3	—		8,092		5,600		23,082		—		23,533		60,307
2	—		—		6,151		—		14,514		—		20,665
1	—		—		—		—		—		—		—
Subtotal - Term Loans	$	14,675	$	38,001	$	66,068	$	42,761	$	30,951	$	23,533	$	215,989

Royalties
Green	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Yellow	—		—		—		—		—		—		—
Red	—		—		—		—		2,286		7,630		9,916
Subtotal - Royalties	$	—	$	—	$	—	$	—	$	2,286	$	7,630	$	9,916

Total Finance Receivables, gross	$	14,675	$	38,001	$	66,068	$	42,761	$	33,237	$	31,163	$	225,905


	December 31, 2024
	2024		2023		2022		2021		2020		Prior		Total
Term Loans
5	$	—	$	—	$	—	$	16,378	$	—	$	28,926	$	45,304
4	7,929		36,406		55,353		—		—		—		99,688
3	—		24,920		—		11,930		—		26,482		63,332
2	—		—		—		14,749		—		—		14,749
1	—		—		—		—		—		1,000		1,000
Subtotal - Term Loans	$	7,929	$	61,326	$	55,353	$	43,057	$	—	$	56,408	$	224,073

Royalties
Green	$	8,005	$	11,685	$	11,231	$	—	$	15,865	$	1,267	$	48,053
Yellow	—		—		—		—		3,053		—		3,053
Red	—		—		—		3,050		8,433		2,347		13,830
Subtotal - Royalties	$	8,005	$	11,685	$	11,231	$	3,050	$	27,351	$	3,614	$	64,936

Total Finance Receivables, gross	$	15,934	$	73,011	$	66,584	$	46,107	$	27,351	$	60,022	$	289,009