Honest Company amends $35M credit facility
The Honest Company, Inc. entered into an amendment to its existing credit agreements, updating its senior secured revolving credit facility.
Rhea-AI Filing Summary
The Honest Company, Inc. entered into an amendment to its existing credit agreements, updating its senior secured revolving credit facility. The amended facility provides up to $35.0 million in revolving borrowing capacity and now matures on March 31, 2029.
The facility includes a letter of credit sublimit of up to $15.0 million, with $1.5 million in letters of credit outstanding as of March 31, 2026. An uncommitted accordion feature may increase total revolving commitments by up to an additional $35.0 million, for potential commitments of $70.0 million.
Interest will be based on either the Adjusted Term SOFR Rate plus a margin of 1.75%–2.25% or a CB floating rate with smaller margins, determined by the Company’s leverage ratio. The debt is secured by substantially all domestic assets and is subject to covenants, including minimum fixed charge coverage and maximum total leverage ratios. The Company had not borrowed under the facility as of March 31, 2026.
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Insights
Honest renews and extends secured liquidity, but with covenant constraints.
The Honest Company updated its revolving credit facility to provide up to $35.0M in borrowing capacity, extend maturity to March 31, 2029, and add an accordion that could raise total commitments to $70.0M. As of March 31, 2026, it had no borrowings and only $1.5M in letters of credit outstanding.
The facility is secured by substantially all domestic assets and guaranteed by material domestic subsidiaries, with pricing tied to leverage via margins of 1.75%–2.25% over the Adjusted Term SOFR Rate or a CB floating rate alternative. Financial covenants on fixed charge coverage and total leverage, plus restrictions on asset sales, additional debt, dividends, and certain investments, limit flexibility if performance weakens.
The extended maturity and available but undrawn capacity support liquidity, while the covenant package and collateralization underscore lender discipline. Future quarterly results will determine how much headroom the Company maintains under the fixed charge coverage and leverage tests in the trailing four-quarter calculations.
8-K Event Classification
4 items: 1.01, 1.02, 2.03, 9.01
4 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 1.02
Termination of a Material Definitive Agreement
Business
A significant contract was terminated, which may affect business operations or revenue.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Revolving credit commitment: $35.0 million
Letter of credit subfacility: $15.0 million
Letters of credit outstanding: $1.5 million
+5 more
8 metrics
Revolving credit commitment
$35.0 million
Aggregate principal amount of the Credit Facility
Letter of credit subfacility
$15.0 million
Maximum letters of credit outstanding at any time
Letters of credit outstanding
$1.5 million
Outstanding as of March 31, 2026
Accordion feature
$35.0 million
Potential additional commitments under uncommitted accordion
Maximum potential commitments
$70.0 million
Total revolving commitments if accordion fully used
SOFR margin range
1.75%–2.25%
Margin over Adjusted Term SOFR Rate based on leverage ratio
CB floating rate floor component
2.50%
One of the benchmarks for the CB floating rate
Facility maturity date
March 31, 2029
Termination date when all borrowings are due
Key Terms
revolving credit facility, borrowing base formula, accordion feature, Adjusted Term SOFR Rate, +2 more
6 terms
revolving credit facility financial
"The Amended Credit Agreement provides a revolving credit facility in an aggregate principal amount of up to $35.0 million"
A revolving credit facility is a type of loan that a business can borrow from whenever it needs money, up to a set limit. It’s like having a credit card for companies—allowing them to borrow, pay back, and borrow again as needed, providing flexibility for managing cash flow or funding short-term expenses.
borrowing base formula financial
"availability of the Credit Facility will be based upon a borrowing base formula and periodic borrowing base certifications"
accordion feature financial
"The Credit Facility includes an uncommitted accordion feature that allows for increases in the Commitment Amount"
An accordion feature is a clause in a loan or financing agreement that allows a company to expand the size of a credit line or the amount of securities available under the same contract without drafting a completely new deal. Like a suitcase that can be extended to hold more items, it gives a company quick flexibility to raise extra money, which can help fund growth but may increase debt or dilute existing shareholders—so investors watch it for changes in risk and ownership.
Adjusted Term SOFR Rate financial
"the interest rate applicable to the Credit Facility will be, at the Company’s option, either (a) the Adjusted Term SOFR Rate"
fixed charge coverage ratio financial
"financial covenants related to a minimum total fixed charge coverage ratio and a maximum total leverage ratio"
A fixed charge coverage ratio measures how well a company's operating income can cover its fixed, recurring obligations like interest payments and lease costs. Think of it as a safety margin — the higher the number, the more comfortably a business can pay steady bills from its normal earnings, which matters to investors because it signals financial stability, lower default risk, and greater ability to withstand revenue dips.
total leverage ratio financial
"The margin will be based upon the Company’s leverage ratio"
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What did The Honest Company (HNST) change in its credit facility?
The Honest Company amended its senior secured revolving credit facility, extending the maturity to March 31, 2029 and maintaining up to $35.0 million in borrowing capacity. The amendment also updated the borrowing formula and interest-rate structure tied to the company’s leverage ratio.
How large is The Honest Company’s amended revolving credit facility?
The amended revolving credit facility provides up to $35.0 million in commitments. It also includes an uncommitted accordion feature that could increase commitments by up to an additional $35.0 million, giving the Company potential total revolving commitments of $70.0 million if fully expanded.
How much of The Honest Company’s credit facility is currently utilized?
As of March 31, 2026, The Honest Company had not borrowed any amounts under the revolving credit facility. It had $1.5 million in letters of credit outstanding against a $15.0 million letter of credit subfacility, leaving the remainder of the commitments available for future use.
What interest rates apply to The Honest Company’s credit facility?
The facility’s interest rate is the Company’s choice of the Adjusted Term SOFR Rate, subject to a 0.00% floor, plus a 1.75%–2.25% margin, or a CB floating rate with smaller margins. The exact margin depends on the Company’s leverage ratio at each measurement point.
What collateral and guarantees secure The Honest Company’s credit facility?
Debt under the credit facility is guaranteed by substantially all of The Honest Company’s material domestic subsidiaries. It is secured by substantially all of the assets of the Company and those subsidiaries, creating a senior secured position for the lenders under the Amended Credit Agreement.
What key covenants are included in The Honest Company’s amended credit facility?
The facility includes financial covenants requiring a minimum total fixed charge coverage ratio and a maximum total leverage ratio, both tested on a trailing four-quarter basis. It also restricts asset sales, additional indebtedness, liens, dividends, and certain investments, subject to customary exceptions.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 31, 2026
(Exact Name of Registrant as Specified in Its Charter)
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On March 31, 2026, The Honest Company, Inc. (the “Company”) entered into a First Amendment to Credit Agreement and First Amendment to Pledge and Security Agreement (the “Amendment”), among the Company, as borrower, the lenders party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, together with any successors and assigns, the “Administrative Agent”) for the Lenders. The Amendment amended the terms of that certain Credit Agreement, dated as of January 25, 2023 (as amended prior to the effectiveness of the Amendment, the “Original Credit Agreement” and, as amended by the Amendment, the “Amended Credit Agreement”), among the Company, as borrower, the Lenders and the Administrative Agent, to, among other things, extend the maturity date of the senior secured revolving credit facility (the “Credit Facility”), modify the borrowing formula and modify the interest rate. The Amendment also amended the terms of that certain Pledge and Security Agreement, dated as of January 25, 2023, between the Company and the Administrative Agent.
The Amended Credit Agreement provides a revolving credit facility in an aggregate principal amount of up to $35.0 million (the “Commitment Amount”) and includes a subfacility that provides for the issuance of letters of credit in an amount of up to $15.0 million at any time outstanding, of which the Company has $1.5 million in existing letters of credit outstanding as of March 31, 2026. If more than 50% of the Commitment Amount is outstanding, availability of the Credit Facility will be based upon a borrowing base formula and periodic borrowing base certifications valuing certain of the Company’s accounts receivable and inventory as reduced by certain reserves, if any. The Credit Facility includes an uncommitted accordion feature that allows for increases in the Commitment Amount to as much as an additional $35.0 million, for up to $70.0 million in potential revolving commitments. The Credit Facility is subject to customary fees for loan facilities of this type, including a commitment fee based on the average daily undrawn portion of the Credit Facility. The Company has not borrowed under the Credit Facility as of March 31, 2026. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Amended Credit Agreement.
The interest rate applicable to the Credit Facility will be, at the Company’s option, either (a) the Adjusted Term SOFR Rate (subject to a 0.00% floor), plus a margin ranging from 1.75% to 2.25% or (b) the CB floating rate, (i) plus a margin of 0% or 0.25% or (ii) minus a margin of 0.25%. The margin will be based upon the Company’s leverage ratio. The CB floating rate is the highest of (a) the Wall Street Journal prime rate and (b) 2.50%.
The Credit Facility will terminate and borrowings thereunder, if any, will be due in full on March 31, 2029. Debt under the Credit Facility will be guaranteed by substantially all of the Company’s material domestic subsidiaries and will be secured by substantially all of the Company’s and such subsidiaries’ assets.
The Company is subject to certain affirmative and negative covenants including financial covenants related to a minimum total fixed charge coverage ratio and a maximum total leverage ratio, each calculated on a trailing four fiscal quarter basis at the end of each fiscal quarter. The Credit Facility also includes customary events of default. The Credit Facility contains covenants that restrict, among other things, the Company’s ability to sell assets, make investments and acquisitions, incur indebtedness, grant liens, change the Company’s lines of business, pay dividends and make certain other restricted payments, each subject to customary exceptions. Failure to do so, unless waived by the Lenders under the Credit Facility pursuant to its terms, as amended, would result in an event of default under the Credit Facility.
The summary of the Credit Facility is qualified in its entirety by reference to the full text of such agreement, which is attached as Exhibit 10.1 to this Form 8-K and incorporated by reference into this Item 1.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth in Item 1.01 above is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description | |||||||
10.1 | * | First Amendment to Credit Agreement and First Amendment to Pledge and Security Agreement | ||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
| * | Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K under the Securities Act of 1933, as amended. The Company agrees to furnish supplementally any omitted schedules to the Securities and Exchange Commission upon request. | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| The Honest Company, Inc. | |||||||||||
| Date: | April 3, 2026 | By: | /s/ Curtiss Bruce | ||||||||
Name: Curtiss Bruce | |||||||||||
Title: Executive Vice President, Chief Financial Officer | |||||||||||