Oaktree Specialty Lending — Income Statement, Cash Flows & Balance Sheet
Is Oaktree Specialty Lending profitable?
Net investment income remains solidly positive, but falling interest rates and a shrinking portfolio are squeezing revenue.
| Metric | FY2024 | FY2025 | Change |
|---|---|---|---|
| Total investment income | $381,665K | $316,801K | -17.0% |
| Net investment income (NII) | $175,052K | $152,640K | -12.8% |
| NII per share | $2.18 | $1.77 | -18.8% |
Oaktree Specialty Lending's core business — lending money and collecting interest — still produces meaningful income, but the trend is moving in the wrong direction. A smaller loan portfolio combined with declining reference interest rates (SOFR fell from ~4.85% to ~4.13% over the year) meant the company collected significantly less interest, and NII per share dropped noticeably.
Large unrealized and realized losses on the portfolio pushed the headline "bottom line" number much lower than NII alone.
| Metric | FY2024 | FY2025 | Change |
|---|---|---|---|
| Net unrealized appreciation (depreciation) | $19,101K | $(101,229)K | swing of -$120M |
| Net realized gains (losses) | $(136,356)K | $(17,097)K | improved by ~$119M |
| Net increase in net assets from operations | $57,905K | $33,920K | -41.4% |
As a Business Development Company (BDC), Oaktree Specialty Lending must mark its loans and equity stakes to market each quarter. A handful of troubled holdings — most notably SIO2 Medical Products, SVP-Singer Holdings, and Mosaic Companies — drove significant write-downs in fair value this year. The silver lining is that realized losses shrank dramatically versus the prior year, when write-offs on Thrasio and Pluralsight were enormous.
Does Oaktree Specialty Lending generate cash?
Despite lower income, the company generated strong operating cash flow, driven by net repayments exceeding new investments.
| Metric | FY2024 | FY2025 | Change |
|---|---|---|---|
| Net cash from operating activities | $19,076K | $228,373K | +$209M |
| Investments purchased | $(1,281,419)K | $(958,743)K | -25.2% |
| Proceeds from sales & repayments | $1,086,222K | $1,044,719K | -3.8% |
| Distributions paid (cash) | $(176,814)K | $(148,199)K | -16.2% |
The portfolio shrank as loan repayments outpaced new originations, which converted paper assets into real cash. That cash was then largely used to pay down borrowings and fund distributions to shareholders.
How strong is Oaktree Specialty Lending's balance sheet?
The company carries substantial leverage, though it remains within regulatory requirements and debt was actually reduced year-over-year.
| Metric | Sep 2024 | Sep 2025 | Change |
|---|---|---|---|
| Total debt (credit facilities + notes) | $1,638,693K | $1,486,880K | -$151.8M |
| Total net assets | $1,487,811K | $1,465,813K | -$21.9M |
| Asset coverage ratio | 188% | 198% | +10pp |
| NAV per share | $18.09 | $16.64 | -8.0% |
Oaktree Specialty Lending reduced its total borrowings meaningfully, refinancing maturing 2025 notes and paying off one credit facility entirely. The asset coverage ratio (a regulatory measure for BDCs requiring a minimum of 150%) improved and remains comfortably above the floor. The decline in NAV per share, however, reflects the accumulated weight of portfolio write-downs and distributions exceeding GAAP earnings.
Ongoing portfolio credit stress — ten investments on non-accrual — is a watchpoint for investors.
| Metric | Sep 2024 | Sep 2025 | Change |
|---|---|---|---|
| Investments on non-accrual | 9 | 10 | +1 |
| Non-accrual % of debt portfolio (cost) | 4.9% | 6.5% | +1.6pp |
| Non-accrual % of debt portfolio (fair value) | 4.0% | 3.0% | -1.0pp |
Non-accrual (loans where the company has stopped recognizing interest because collection is uncertain) ticked up slightly in number. The gap between the cost percentage and fair value percentage tells you these problem loans are trading at a steep discount to what was originally lent — meaning losses have already been partially recognized, but further write-downs remain possible.