S&P slashes HealthChannels

S&P said it downgraded its ratings for HealthChannels Intermediate HoldCo LLC to SD, selective default, from CCC and its first-lien term loan to D from CCC.

HealthChannels recently bought back a small portion of its $385 million first-lien term loan, $333.2 million as of September, due April 2025 at a discount after previously repurchasing debt at a discount in the first and second quarters of 2023.

“The downgrade reflects HealthChannels' latest subpar debt repurchases. The continued repurchases of its $385 million first-lien term loan over the past three quarters bring the cumulative amount of repurchases to roughly $20 million below par, more than 5% of the debt. We view these repurchases as distressed transactions because lenders received materially less value than originally promised (approximately 70 cents on the dollar) and the company's operating results are in distressed territory,” S&P said in a statement.

The agency said it plans to leave the loan’s rating at D until it considers any more below-par buybacks as “remote.”

“We plan to reassess our issuer credit rating on the company and our issue-level ratings on the affected debt over the coming days and expect the rating to return to CCC based on our expectation that HealthChannels could repurchase additional debt below par value in the next few months, which we would also view as tantamount to default,” S&P said.

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