KORU Medical Systems Extends Debt Maturities, Lowers Interest Rate Floor, and Gains Covenant Flexibility

summarizeSummary

KORU Medical Systems amended its loan and security agreement, extending the maturity dates for its $5M revolving credit and $5M term loan facilities, lowering the interest rate floor, and replacing a restrictive financial covenant with a more flexible liquidity measure.

check_boxKey Events

• Extended Debt Maturities

  The maturity of the $5,000,000 Revolver was extended from December 31, 2026, to March 30, 2028. The interest-only period for the $5,000,000 Term Loan was extended to June 30, 2027 (with a possible further extension to December 31, 2027), and its maturity was extended to December 1, 2029.

• Lowered Interest Rate Floor

  The interest rate floor for both the Revolver and Term Loan facilities was lowered from 6.50% to 5.50%.

• Improved Covenant Flexibility

  The adjusted quick ratio covenant was removed and replaced with a new remaining months liquidity covenant of at least twelve months, which is deemed compliant if the trailing three-month average Adjusted EBITDA is positive.

• No Current Draw on Facility

  The company has not yet drawn on the $10,000,000 credit facility, maintaining future liquidity options.

auto_awesomeAnalysis

This amendment significantly enhances KORU Medical Systems' financial flexibility and extends its liquidity runway. By pushing out the maturity dates for both its revolving credit and term loan facilities, the company gains more time to manage its debt obligations. The reduction in the interest rate floor could lead to lower borrowing costs if the facilities are drawn upon. Furthermore, replacing the adjusted quick ratio covenant with a more flexible remaining months liquidity covenant, which includes an Adjusted EBITDA positive override, provides greater operational freedom and reduces the risk of covenant breaches. This move strengthens the company's balance sheet management, building on the improved financial health reported in its recent 10-K.