Summary
McKesson Corporation (MCK) filed an 8-K on April 1, 2021, primarily to disclose an amendment to its existing 2019 Credit Facility. This amendment, designated as Amendment No. 2, was entered into on March 31, 2021, and modifies specific financial covenants within the credit agreement. The key change introduced by Amendment No. 2 concerns the company's Leverage Ratio. McKesson will now be required to maintain a ratio of Total Debt to Consolidated EBITDA of at least 4.00 to 1.00 on a standard basis, and at least 4.50 to 1.00 in instances involving a Material Acquisition. This metric will be calculated retrospectively over a rolling four-quarter period. Investors should note that the definition of Consolidated EBITDA within this credit facility may differ from other common calculations.
Key Highlights
- 1McKesson Corporation amended its 2019 Credit Facility on March 31, 2021.
- 2The amendment, Amendment No. 2, revises financial covenants related to the company's leverage.
- 3The company must now maintain a Leverage Ratio (Total Debt to Consolidated EBITDA) of at least 4.00 to 1.00.
- 4A higher Leverage Ratio of 4.50 to 1.00 is permitted under circumstances involving a Material Acquisition.
- 5The Leverage Ratio is calculated using a rolling four-quarter retrospective method.
- 6This filing does not contain new financial statements, but rather updates to debt covenants.