Laboratory Corporation of America Holdings (LH)
Interest coverage
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 806,700 | 1,072,200 | 1,220,800 | 1,425,300 | 1,779,000 | 2,340,600 | 2,713,200 | 2,948,500 | 3,336,500 | 3,898,700 | 4,087,000 | 3,708,400 | 2,425,600 | 1,492,000 | 303,500 | 282,600 | 806,700 | 1,050,100 | 1,799,200 | 1,845,900 |
| Interest expense (ttm) | US$ in thousands | 199,600 | 200,400 | 196,400 | 188,900 | 180,400 | 173,900 | 169,800 | 205,800 | 212,100 | 217,300 | 226,500 | 200,900 | 207,400 | 223,500 | 232,600 | 239,000 | 240,700 | 234,500 | 233,400 | 237,400 |
| Interest coverage | 4.04 | 5.35 | 6.22 | 7.55 | 9.86 | 13.46 | 15.98 | 14.33 | 15.73 | 17.94 | 18.04 | 18.46 | 11.70 | 6.68 | 1.30 | 1.18 | 3.35 | 4.48 | 7.71 | 7.78 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $806,700K ÷ $199,600K
= 4.04
The interest coverage ratio for Laboratory Corp. Of America Holdings has shown a declining trend over the past eight quarters, indicating a gradual decrease in the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). The ratio decreased from 16.49 in Q2 2022 to 5.62 in Q4 2023.
A higher interest coverage ratio suggests that the company is more capable of meeting its interest obligations, whereas a lower ratio implies a heightened risk of default on debt payments. The downward trajectory in interest coverage may raise concerns about the company's financial health and its ability to service its debt obligations effectively. Further analysis, including consideration of the company's overall profitability and cash flow, would be necessary to fully assess the implications of this trend.
Peer comparison
Dec 31, 2023