Root refinances debt and authorizes $75 million share buyback program

Root Inc. (NASDAQ: ROOT) completed a $200 million debt refinancing and announced a $75 million share repurchase program, according to a company statement.

The insurance technology company refinanced its existing debt through a new senior secured term loan led by The Huntington National Bank on May 4. The new facility matures on May 4, 2029, and carries an initial interest rate of SOFR plus 3.25%, representing a 225 basis point reduction from the previous facility.

Root used proceeds from the new term loan to repay its existing $200 million facility with BlackRock. The company expects the refinancing to generate approximately $4.5 million in annual interest expense savings. Root will expense about $4.8 million in the second quarter related to unamortized debt discount, issuance costs, and prepayment premium from the prior loan.

The board of directors authorized a share repurchase program allowing the company to buy back up to $75 million of its Class A common stock. The program has no fixed expiration date and may be executed through various methods including open market purchases, privately negotiated transactions, or accelerated share repurchase agreements.

"These actions reflect the strength of our operating performance and the progress we've made improving our cost of capital," said Alex Timm, founder and CEO. "With a more efficient capital structure, we have greater flexibility to allocate capital dynamically."

The repurchase program does not obligate Root to buy back any specific number of shares and may be modified, suspended, or discontinued at the board's discretion.

Root operates a car insurance business using telematics and data science. The company's mobile app has reached more than 17 million downloads and analyzed nearly 36 billion miles of driving data.

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