AFCG — Q2 2026 Financial Report Analysis
Q2 · Fiscal year 2026 · Published by Pham Hop
Advanced Flower Capital's second quarter as a BDC: $0.15 per share of net investment income covered a $0.05 dividend and NAV rose to $8.25, but three cannabis loans equal to 35.7% of the book at cost remain on nonaccrual.
- Revenue
- $8.7M
- +7.8% YoY
- Net income
- $5.4M
- Diluted EPS
- $0.23
This period vs a year ago
- Same period last year
- This period
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Overview
Advanced Flower Capital (AFCG, formerly AFC Gamma) is a specialty lender. It raises money from shareholders and by borrowing, then makes senior secured loans (loans that are repaid first and are backed by the borrower's assets) at double-digit interest rates. For most of its history it lent to state-licensed cannabis operators. Cannabis is still illegal under US federal law, so most banks will not lend to these companies, and a small group of niche lenders fills that gap at high rates. That high yield is paid for with credit risk. If a borrower defaults, AFCG may not be able to take over its cannabis licenses or plants directly, which makes recoveries slow and uncertain.
This was AFCG's second quarter under a new structure. On January 1, 2026 it stopped being a REIT (real estate investment trust) and became a BDC (business development company), a regulated fund-like lender that must record every loan at fair value each quarter. The new advisory agreement also widened its mandate: cannabis lending is "no longer our primary focus," and new money is going to other industries. Q2 2026 net investment income (NII, the interest earned minus fees, interest costs and running expenses, before any gains or losses on loan values) was $3.5 million, or $0.15 per share. That covered the cut $0.05 dividend three times over. Three of the 17 loans are still on nonaccrual (the lender has stopped booking interest because it doesn't expect to collect it), and they make up 35.7% of the portfolio at cost.
At a glance
- Net asset value (NAV) $8.25 per share, up from $7.46 book value at year-end 2025 and $8.18 a year earlier. About $0.18 of the rise since March came from buying back stock far below NAV, at an average of $3.29 per share.
- 35.7% of the loan book at cost is on nonaccrual. That is three cannabis borrowers (Justice Cannabis, Devi Holdings, DMA Holdings) carried at $126.5 million of cost but marked at $65.9 million, roughly 52 cents on the dollar.
- $94.9 million of new loans in the first half, almost all outside cannabis. Cannabis fell to 68.5% of the portfolio at fair value. STAT Buyer (business services, $56.6 million) and BCIS AH Borrower (insurance, $29.8 million) are now the two largest performing loans.
Q2 2026 results
The 2026 statements use investment-company accounting (ASC 946), and management says they "are not comparable" to the 2025 REIT-format statements. Total investment income is the one line that can fairly be compared year over year. The earnings lines are not like-for-like: the 2025 quarter's loss came mostly from a $15.9 million credit-loss provision under the old accounting.