KinderCare expands credit facility to $262.5 million

KinderCare Learning Companies, Inc., a leading provider of child day care services with annual revenue of $2.63 billion, has announced an expansion of its credit facilities. On Monday, the company, through its wholly owned subsidiary KUEHG Corp., amended its credit agreement to increase its revolving credit commitments by $22.5 million, bringing the total to $262.5 million. According to InvestingPro analysis, this move comes as the company faces some liquidity challenges, with short-term obligations exceeding liquid assets and a current ratio of 0.6.

The amendment, effective February 11, 2025, includes an additional $22.5 million from a new lender and a reclassification and extension of $5.0 million from an existing lender. Following this adjustment, the First Lien Revolving Credit Facility consists of $252.5 million in extended commitments and $10.0 million in non-extended commitments.

The extended portion of the credit now has a maturity date of October 10, 2029, or earlier if certain conditions relating to the original term loan’s maturity date are met. The non-extended commitments will mature on June 12, 2028. As of the filing date, there were no outstanding borrowings under the First Lien Revolving Credit Facility.

KinderCare, headquartered in Lake Oswego, Oregon, and incorporated in Delaware, operates under the trading symbol KLC on the New York Stock Exchange. This financial maneuver is detailed in an 8-K filing with the Securities and Exchange Commission, and the full text of the amendment will be included in the company’s annual report on Form 10-K for the fiscal year ended December 28, 2024.

This expansion of KinderCare’s credit facilities reflects the company’s ongoing financial strategy and its commitment to maintaining a solid capital structure. The additional funds from the extended credit facility will provide KinderCare with increased financial flexibility for its operations and potential growth initiatives.

In other recent news, KinderCare Learning Companies has been the subject of several analyst adjustments. UBS recently reduced the company’s stock target to $28 while maintaining a Buy rating, citing slower anticipated enrollment growth in the fourth quarter. However, UBS analyst Joshua Chan suggested that KinderCare could surpass revenue and EBITDA expectations for the quarter.

Morgan Stanley (NYSE:MS), on the other hand, upgraded KinderCare stock from Equalweight to Overweight, maintaining a $30 price target. The firm sees the recent stock drop as an opportunity for investors, highlighting a 43% upside potential.

BMO Capital Markets also adjusted its outlook on KinderCare, lowering the price target to $31 from $34, despite the company surpassing adjusted EBITDA forecasts in its first earnings announcement since going public. Meanwhile, Baird upgraded KinderCare from Neutral to Outperform, setting a new price target of $30, expressing confidence in the company’s future performance.

Recent developments also include KinderCare reporting a Q3 earnings beat, with revenue up 7.5% year-over-year. The company reported adjusted earnings per share of $0.05, surpassing the analyst consensus estimate of a $0.02 loss per share. Revenue for the quarter came in at $671.5 million, slightly above the $669.42 million analysts were expecting.

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