S&P slices HealthChannels

S&P said it downgraded its ratings for HealthChannels Intermediate HoldCo LLC and its first-lien debt to CCC from B- and revised the outlook to negative from stable. The 3 first-lien recovery rating is unchanged.

Recently, HealthChannels bought back a small amount of its $385 million first-lien term loan in two purchases at below-par prices. S&P warned it anticipates HealthChannels buying back more. It would probably consider them distressed given the company’s operating trends, trading levels and the total value of the repurchases.

“The downgrade reflects our expectations that HealthChannels may struggle to refinance its $385 million first-lien term loan due in April 2025 in a challenging operating and macro environment. Although market conditions for many healthcare providers stabilized following the impact of the Covid-19 pandemic, with emergency department volumes returning to near pre-pandemic levels, HealthChannels has not rebounded,” the agency said in a press release.

The negative outlook reflects a forecast for revenue and EBITDA declines in 2023 and minimal cash flow generation could elevate refinancing risk for the 2025 term loan. The weaker outlook also indicates the concern HealthChannels would make more below-par loan repurchases within the next 12 months, S&P warned.

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