Bioventus Inc.BVS
Bioventus Inc. Debt Disclosure
Financial instruments
Long-term debt consisted of the following as of December 31:
| 2024 | 2023 | ||||||||||
Amended Term Loan due October 2026 (9.26% at December 31, 2024) | $ | 337,864 | $ | 382,448 | |||||||
Revolver due October 2025 (9.26% at December 31, 2024) | — | 15,000 | |||||||||
| Less: | |||||||||||
| Current portion of long-term debt | (27,339) | (27,848) | |||||||||
| Unamortized debt issuance cost | (1,147) | (917) | |||||||||
| Unamortized discount | (1,090) | (1,685) | |||||||||
| $ | 308,288 | $ | 366,998 | ||||||||
Amended Term Loan
On December 6, 2019, the Company entered into a Credit and Guaranty Agreement (the “2019 Credit Agreement”) that was comprised of a $200,000 term loan (“Original Term Loan”) and a $50,000 revolving facility (the “Revolver”). The Company amended the 2019 Credit Agreement on August 29, 2021, and then again on October 29, 2021 in connection with the acquisition of Misonix, Inc. in which the Company prepaid $80,000 on the Original Term Loan. The 2019 Credit Agreement, as amended, subsequent to the prepayment, was comprised of a $360,750 term loan (“Term Loan”) and the Revolver.
On July 11, 2022, the Company further amended the 2019 Credit Agreement in conjunction with the acquisition of CartiHeal. Pursuant to that amendment, an $80,000 term loan facility (the “July 2022 Term Loan” and, together with the Term Loan, the “Term Loan Facilities”) was extended to the Company to be used for: (i) the financing of the acquisition of CartiHeal; (ii) the payment of related fees and expenses; (iii) repayment of the draws made on the Revolver; and (iv) working capital needs and general corporate purposes of the Company, including without limitation for permitted acquisitions.
The Company was not in compliance with certain financial covenants as of December 31, 2022. As a result, on March 31, 2023, the Company entered into another amendment to the 2019 Credit Agreement to, among other things, modify certain financial covenants, waive the noncompliance at December 31, 2022, and to modify interest rates applicable to borrowings under the 2019 Credit Agreement.
On January 18, 2024 (the “Closing Date”), the Company further amended the 2019 Credit Agreement (collectively, with the August 2021, October 2021, July 2022 and March 2023 amendments, the “Amended 2019 Credit Agreement”), to further modify certain financial covenants under the 2019 Credit Agreement. The Company was in compliance as of December 31, 2024 and 2023 with the financial covenants as stated within the 2019 Credit Agreement then in effect.
The Term Loan Facilities matures on October 29, 2026 (“Maturity”). The Revolver matures on October 29, 2025.
Secured overnight financial rate (“SOFR”) loans and base rate loans had a margin of 3.25% and 2.25%, respectively, subsequent to July 11, 2022 and prior to the Closing Date. Subsequent to the March 31, 2023 amendment, SOFR loans and base rate loans had a margin of 4.25% and 3.25%, respectively. All obligations under the Amended 2019 Credit Agreement are guaranteed by the Company and certain wholly owned subsidiaries where substantially all the assets of the Company collateralize the obligations.
The Amended 2019 Credit Agreement contains customary affirmative and negative covenants, including those related to financial reporting and notification, restrictions on the declaration or payment of certain distributions on or in respect of Bioventus LLC’s equity interests, restrictions on acquisitions, investments and certain other payments, limitations on the incurrence of new indebtedness, limitations on transfers, sales and other dispositions of assets of Bioventus LLC and its subsidiaries, as well as limitations on making changes to the business and organizational documents of Bioventus LLC and its subsidiaries. Financial covenant requirements include (i) a maximum debt leverage ratio of not greater than 4.50 to 1.00 for the testing period ending December 31, 2024, 4.25 to 1.00 for the testing period ending March 31, 2025, 4.00 to 1.00 for the testing period ending June 30, 2025 and at the end of each testing period occurring thereafter, and beginning on March 31, 2025, to be subject to a temporary increase to 4.50 to 1.00 upon certain events; and (ii) an interest coverage ratio not less than 2.00 to 1.00 for the testing period ending December 31, 2024, 2.00 to 1.00 for the testing period ending March 31, 2025, 2.25 to 1.00 for the testing period ending June 30, 2025, 2.50 to 1.00 for the testing period ending September 30, 2025 and 3.00 to 1.00 for the testing period ending December 31, 2025 and each testing period thereafter. In addition, during the period commencing on the Closing Date and ending upon the satisfaction of certain conditions occurring not prior to October 29, 2025, the Company will be subject to certain additional requirements and covenants, including a requirement to maintain Liquidity (as defined in the Amended 2019 Credit Agreement) of not less than $10,000 as of the end of each calendar month during such period.
The January 2024 amendment had deferred financing costs of $1,180, of which $325 was expensed and $855 was capitalized. The March 2023 amendment had deferred financing costs of $3,661, of which $1,617 was expensed and $2,044 was capitalized. There were no losses on debt refinancing and modification as a result of either the January 2024 or March 2023 amendments. Deferred financing costs expensed resulting from the amendments were recorded in selling, general and administrative expense within the consolidated statements of operations and other comprehensive loss and amounts capitalized were recorded primarily in long-term debt, less current portion within the consolidated balance sheets.
As of December 31, 2024, $335,627 was outstanding on the Term Loan Facilities, net of original issue discount of $1,090 and deferred financing costs of $1,147. Capitalized deferred fees are amortized to interest expense on a straight-line basis over the term of the Term Loan Facilities, which approximates the effective interest method. The Company recorded $1,524, $1,706 and $853 for deferred cost amortization in interest expense for the years ended December 31, 2024, 2023 and 2022, respectively. Scheduled quarterly principal payments for the Term Loan Facilities are $5,301 in the third quarter of 2025, $22,038 in the fourth quarter of 2025, three quarterly payments of $11,019 during 2026 with a final payment of $277,469 at Maturity. Contractual maturities of long term debt for the next two years are as follows: 2025—$27,339 and 2026—$310,525.
The Company may voluntarily prepay the Term Loan Facilities without premium or penalty upon prior notice. The Company may be required to make additional principal payments on the Term Loan Facilities dependent upon certain events as defined in the Amended 2019 Credit Agreement. These additional prepayments will be applied to the scheduled installments of principal in direct order of maturity of first the Base Rate (BR) portions of the Term Loan Facilities and then the Eurodollar portions.
The estimated fair value of the Term Loan Facilities was $338,708 as of December 31, 2024. The fair value of these obligations was determined based on the midpoint of the Bloomberg Valuation, as of December 31, 2024. This is classified as a Level 2 instruments within the fair value hierarchy.
Revolver
The Revolver was a five-year revolving credit facility, that was subsequently reduced to a four-year revolving credit facility in the Amended 2019 Credit Agreement, that includes revolving and swingline loans as well as letters of credit (“LOC”) and, inclusive of all, cannot exceed $40,000 at any one time. The Revolver’s capacity was reduced $5,000 on December 31, 2023 and June 30, 2024 in accordance with the Amended 2019 Credit Agreement. LOCs are available in an amount not to exceed $7,500. Revolving loans are due at the earlier of termination or Maturity. Swingline loans are available as BR interest rate option loans only and must be outstanding for at least five days. Swingline loans are due the fifteenth or last day of a calendar month or Maturity whichever is earlier. As of December 31, 2024, the Company had three LOCs outstanding leaving approximately $37,800 available. The Revolver had no outstanding borrowings as of December 31, 2024 and $15.0 million at December 31, 2023.
Interest
The Term Loan Facilities and Revolver permit the Company to elect either the secured overnight financial rate (“SOFR”) or base interest rate (“BR”) options for the entire amount or certain portions of the loans. Both the SOFR and BR options have interest rates equal to a formula driven base interest rate plus a margin, tied to a leverage ratio. The leverage ratio is the ratio of debt to consolidated EBITDA as defined in the Amended 2019 Credit Agreement. BR portions of the Term Loan Facilities have interest due the last day of each calendar quarter-end. Pursuant to the Amended 2019 Credit Agreement, the margin at each applicable leverage ratio will be increased by 1.00% per annum. SOFR portions of the Term Loan Facilities have one, three or six-month interest reset periods and interest is due on the last day of each three-month period or the last day of the loan term if less than three months.
Pricing grids are used to determine the applicable loan margins based on the type of loan and the leverage ratio. The loan margin is adjusted after the quarterly financial statements are delivered to the lenders in accordance with the below pricing grid, which reflects the margins in effect under the Amended 2019 Credit Agreement:
Leverage ratio | SOFR | BR | |||||||||
> 4.00 to 1.00 | 4.25 | % | 3.25 | % | |||||||
≥ 3.50 to 1.00 and < 4.00 to 1.00 | 3.75 | % | 2.75 | % | |||||||
≥ 3.00 to 1.00 and < 3.50 to 1.00 | 3.25 | % | 2.25 | % | |||||||
≥ 2.50 to 1.00 and < 3.00 to 1.00 | 3.00 | % | 2.00 | % | |||||||
< 2.50 to 1.00 | 2.75 | % | 1.75 | % | |||||||
The Revolver includes a commitment fee at 0.30% of the average daily amount of the available revolving commitment, assuming any swingline loans outstanding are zero. There were no swingline loans outstanding as of December 31, 2024. The fee is payable quarterly in arrears on the last day of the calendar quarters and at Maturity. The commitment fee rate is adjusted after the quarterly financial statements are delivered to lenders based on the below pricing grid under the Amended 2019 Credit Agreement:
Leverage ratio | Commitment Fee Rate | ||||
≥ 2.50 to 1.00 | 0.30 | % | |||
< 2.50 to 1.00 | 0.20 | % | |||
Fees are charged on all outstanding LOCs at an annual rate equal to the margin in effect on Eurodollar revolving loans. A funding fee of 0.125% per year on the undrawn and unexpired amount of each LOC is payable as well. The fees are payable quarterly in arrears on the last day of the calendar quarters. The Company’s effective weighted average interest rate was 9.30% for all outstanding debt as of December 31, 2024. Cash paid for interest totaled $38,507, $32,470 and $18,043 for the December 31, 2024, 2023 and 2022, respectively.
Interest rate swap
The Company historically entered into interest rate swap agreements to limit its exposure to changes in the variable interest rate on its long-term debt. The Company had one non-designated interest rate swap agreement that was terminated on October 28, 2022 and subsequently received $7,738 upon its termination. The swap was carried at fair value on the balance sheet with changes in fair value recorded as interest income or expense within the consolidated statements of operations and . Net interest income of $6,396 was recorded related to the change in fair value of the interest rate swap for the year ended December 31, 2022.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.