Labcorp secures $2 billion in senior notes

Labcorp Holdings Inc. (NYSE:LH) has entered a material definitive agreement, issuing $2 billion in senior notes, according to a recent SEC filing. Monday's announcement detailed the public offering, which consists of three tranches: $650 million of 4.350% notes due 2030, $500 million of 4.550% notes due 2032, and $850 million of 4.800% notes due 2034.

The Burlington (NYSE:BURL), NC-based medical laboratories company, formerly known as Laboratory Corp of America Holdings, will pay semi-annual interest on the notes starting April 1, 2025. The notes were offered via a shelf registration statement filed on May 17, 2024, and a prospectus supplement dated September 16, 2024.

Labcorp's indenture includes covenants limiting the ability of the issuer and its subsidiaries to engage in certain transactions such as creating liens, entering sale and leaseback transactions, and incurring subsidiary-level indebtedness or issuing preferred stock, subject to specified exceptions.

The company may redeem the notes before their respective par call dates at a price either equal to 100% of the principal amount or a make-whole premium, plus accrued and unpaid interest. After the par call dates, the redemption price will be 100% of the principal amount.

The net proceeds from the offering, estimated at approximately $1.982.1 million after expenses, are expected to be used for redeeming or repaying existing indebtedness, including Labcorp's outstanding 2.300% Senior Notes due 2024, its 3.600% Senior Notes due 2025, and $350 million of borrowings under its revolving credit facility. Any remaining funds may be directed toward general corporate purposes.

In other recent news, Laboratory Corporation of America (NYSE:LH), also known as Labcorp, has seen a surge in its stock as investment banking firm Jefferies raised the price target on shares. This adjustment reflects confidence in Labcorp's core diagnostics business and its continued mergers and acquisitions activity. Baird also boosted the company's stock target, retaining an Outperform rating, following the finalized acquisition of Invitae (OTC:NVTAQ), which is expected to contribute significantly to Labcorp's revenue.

The company reported impressive growth in the second quarter of 2024, with revenues reaching $3.2 billion and adjusted earnings per share of $3.94. Labcorp's diagnostics revenue grew by 8%, and biopharma laboratory services saw a 1% increase. Moreover, Labcorp's Board of Directors approved a $1 billion increase in its share repurchase authorization.

On the other hand, Immutep (NASDAQ:IMMP) Ltd filed a preliminary financial report with the Securities and Exchange Commission, as part of regular disclosures to keep stakeholders informed about its financial health. The document outlines the company's financial status without providing detailed figures or outcomes.

BofA Securities also raised its price target for Labcorp, maintaining a Buy rating and expecting the Invitae assets to become net accretive to earnings per share in 2025. These developments underscore a positive outlook on Labcorp's ability to achieve its financial targets for the year.

InvestingPro Insights

Labcorp Holdings Inc. (NYSE:LH) has shown strategic financial management with its recent issuance of $2 billion in senior notes. In light of this, some key metrics from InvestingPro provide additional context to the company's current financial health and market position. Labcorp's market capitalization stands at $18.87 billion, reflecting its significant presence in the healthcare industry. The company trades at a P/E ratio of 42.45, which is adjusted to 23.57 for the last twelve months as of Q2 2024, indicating a valuation that anticipates growth.

InvestingPro Tips highlight that Labcorp is a prominent player in the Healthcare Providers & Services industry and has been profitable over the last twelve months. Additionally, with a high shareholder yield and management's aggressive share buyback strategy, the company is actively returning value to its shareholders. Analysts are optimistic, predicting that Labcorp's net income is expected to grow this year.

For investors seeking further insights, there are additional InvestingPro Tips available, which provide a comprehensive analysis of Labcorp's financials and market performance. For instance, the company's stock generally trades with low price volatility, and it is trading near its 52-week high, which could be a sign of market confidence in its stability and growth prospects. To explore these insights further, investors can visit InvestingPro for a total of 9 additional tips related to Labcorp Holdings Inc.

Understanding these financial metrics and strategic tips can be crucial for investors considering Labcorp's debt management strategy and overall investment potential.

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