S&P gives Quantum Health, loan B-

S&P said it gave B- ratings to Quantum Health Inc. and its planned senior secured credit facility, which comprises a $60 million first-lien revolver and a $300 million first-lien term loan. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 50%) recovery in default.

The company is being acquired by Warburg Pincus, though the current owner and management will keep an equity stake.

“Our rating on Quantum Health reflects its small scale and narrow focus in the nascent business as a third-party provider of care navigation and care coordination services to self-insured employer health insurance plans in the U.S.,” S&P said in a press release.

The outlook is stable. The outlook reflects a forecast revenue will grow by more than 10% annually, gradual improvement in adjusted EBITDA margins in the mid-teens range, and that high-interest expense and elevated capex will result in modest free operating cash flow deficits over the next two years, before turning positive, S&P said.

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