S&P gives Sound Inpatient loans B, CCC+

S&P said it assigned its B corporate credit rating to Sound Inpatient Physicians Holdings LLC.

The outlook is stable.

At the same time, the agency assigned its B issue-level rating to the company's proposed first-lien credit facility, which consists of a $75 million revolving credit facility due 2023 and a $545 million first-lien term loan due 2025.

The 3 recovery indicates an expectation for meaningful (50%-70%; rounded estimate: 60%) recovery in the event of default.

S&P also assigned a CCC+ issue-level rating and 6 recovery rating to the company's proposed second-lien credit facility, indicating negligible (0%-10%; rounded estimate: 0%) recovery in a default.

“The ratings on Sound reflect its narrow operating focus in a highly fragmented hospitalist staffing business that has low entry barriers, exposure to government reimbursement risk (about 30% from Medicare and Medicaid) and EBITDA margins below average compared with health care service companies (below 15%),” the agency said in a news release.

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