Overall, Index revenue grew by 3% during the first two months of the fourth quarter.

The Golub Capital Altman Index can provide early insight into the financial performance of public companies and GDP in advance of earnings season.

Middle market private companies in the Golub Capital Altman Index experienced year-over-year earnings growth of 14.9% and revenue growth of 2.9% during the first two months of the fourth quarter of 2020. This compares to year-over-year earnings growth of 14.9% and revenue growth of 1.1% in the third quarter of 2020.

Lawrence E. Golub, CEO of Golub Capital, said, “The pace of earnings growth in the third and fourth quarters was the fastest in the history of the Golub Capital Altman Index. These strong results suggest that forward-thinking companies used the Covid disruption strategically; they adapted to changes in customer behavior, rationalized underperforming business lines and locations, and refocused on higher-margin activities.”

Dr. Edward I. Altman said, “The fourth quarter set a record for profit growth in the Healthcare sector of the Golub Capital Altman Index, surpassing the prior record in the third quarter. Profit growth in the third quarter likely reflected catch-up demand from Covid shutdowns, but the acceleration in the fourth quarter suggests other factors may also be at work. Demand for Covid testing has been a boon for providers like urgent care center franchises. State and local subsidies are likely playing a role, as are cost control measures and consolidation. Looking beyond Healthcare, profit growth was robust in the Consumer, Industrial and Technology sectors. We do not want to overstate the case for recovery given that heavily Covid-impacted sectors are not in our data set. However, while caution is warranted until Covid is under control, our data suggests the U.S. middle market remains resilient.”

The Golub Capital Altman Index (“GCAI”), which is produced by Golub Capital in collaboration with renowned credit expert Dr. Edward I. Altman, is the first and longest-running index based on actual revenue and earnings (defined as earnings before interest, taxes, depreciation and amortization, or “EBITDA”) for middle market companies. It measures the median revenue and earnings growth of more than 150 private U.S. companies in the loan portfolio of Golub Capital, a leading middle market lender. Reported shortly before public company quarterly earnings season, the GCAI has served as a reliable indicator of the overall growth rates in revenue and earnings of public companies in market indexes such as the S&P 500 and S&P SmallCap 600 (“S&P 600”), as well as quarterly Gross Domestic Product (“GDP”), according to statistical back-testing dating back to 2012, when data began to be tracked.

The size and diversity of the Golub Capital loan portfolio ensure that the confidentiality of all company-specific information used in the index is maintained in both the aggregate and industry segment data.

We believe the results (1) are representative of the general performance of middle market companies, which are a major contributor to U.S. private sector employment; (2) can be easily compared to the performance of the public companies that make up major stock indexes; (3) are relevant to the aggregate economic performance of the U.S. economy and (4) provide timely information for the investment community.

The companies in the GCAI operate in a wide range of industries. Results are provided for the total universe of GCAI constituents and by industry segment. Given the index’s limited exposure to Financials, Utilities, Energy and Materials, comparisons are made to the S&P 500 and S&P 600 as well as to “adjusted” versions of those indexes that exclude the aforementioned sectors.