Labcorp expands credit facility to $700 million

Labcorp Holdings Inc. (NYSE:LH), a prominent $20.8 billion healthcare diagnostics company, announced today an expansion of its credit facilities, underscoring the company’s ongoing financial strategy.

The healthcare diagnostics company, known for its medical laboratory services and maintaining a strong financial health score according to InvestingPro, entered into an amendment of its receivables purchase agreement, increasing the facility limit from $300 million to $700 million.

With the stock trading near its 52-week high of $258.59, investors seeking deeper insights can access comprehensive analysis through InvestingPro’s detailed research reports.

The amendment, effective January 31, 2025, involves several key changes. Notably, The Toronto-Dominion Bank (TSX:TD) has joined as a committed purchaser with a commitment termination date set for January 30, 2026. Additionally, MUFG Bank Ltd. and related conduit purchasers have been added as purchasers under the agreement. The company maintains a healthy current ratio of 1.44 and a conservative debt-to-capital ratio of 0.27, indicating strong financial management.

Under the amended terms, the newly added MUFG Bank Ltd. may have loans or investments accruing interest at a rate pegged to the Commercial Paper (CP) Rate plus an applicable margin. This is in contrast to other purchasers whose interest rates are tied to a daily or term Secured Overnight Financing Rate (SOFR) plus a 0.10% SOFR adjustment or a base rate, along with an applicable margin.

Labcorp Receivables LLC, a separate legal entity within the Labcorp corporate structure, was acknowledged in the agreement. It holds its own assets and creditors, with the stipulation that its assets are not available to pay creditors of Labcorp or its other subsidiaries, except in the case where receivable collections exceed the amounts required to repay the purchasers and other creditors of Labcorp Receivables.

The expansion of the credit facility is designed to provide Labcorp with increased financial flexibility. The company’s executive leadership has not provided commentary on the specific intentions behind the increased credit line, but the move suggests a proactive approach to managing the company’s capital structure. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with seven additional exclusive ProTips available to subscribers looking to make informed investment decisions.

Investors and stakeholders can refer to the full text of the Receivables Purchase Agreement Amendment, filed as Exhibit 10.1 in the SEC filing, for more detailed information. This financial maneuver is based on a press release statement, and the information is derived from the SEC filing made by Labcorp Holdings Inc. on January 31, 2025.

In other recent news, Laboratory Corporation of America Holdings, commonly known as LabCorp, has seen a flurry of activity. Evercore ISI upgraded LabCorp’s shares from "In Line" to "Outperform," reflecting positive earnings outlooks. The analysts anticipate robust lab volume growth through 2025, with the acquisition of Invitae (OTC:NVTAQ) expected to contribute positively to earnings from the second half of the year.

In partnership with the U.S. Centers for Disease Control and Prevention, LabCorp has developed a test for the H5 bird flu. This test is part of LabCorp’s ongoing efforts to support healthcare providers and public health agencies by enhancing testing capabilities. However, the test is not yet authorized for use in New York State.

Jefferies initiated coverage on LabCorp with a Buy rating and a price target of $275, citing the company’s recovery from COVID-19 related challenges and promising revenue growth. Baird, on the other hand, revised its price target for LabCorp, reducing it to $286.00 from $289.00, but maintained an Outperform rating on the company’s stock.

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