Fitch lowers Gainwell to B-

Fitch Ratings downgraded its long-term issuer default rating for Gainwell Acquisition Corp. to B-.

Further, the agency lowered the senior secured first-lien term loan rating to B+ from BB- and maintained the recovery rating at RR2.

Fitch additionally assigned a rating of B+/RR2 to the $250 million recent incremental term loan that is pari-passu with Gainwell's existing first-lien debt.

The downgrade reflects Fitch's expectation that Gainwell's operational performance could be lower than earlier projected due to higher-than-expected Medicaid Enterprise System implementation costs. Consequently, free cash flow margins are anticipated to remain negative in fiscal 2024, with the expectation of breakeven in fiscal 2025.

Fitch expects Gainwell's EBITDA leverage to be approximately 9.9x by the end of fiscal 2024, and remain near 7x through the rating period.

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