S&P drops GoodRx loan rating, view to positive

S&P said it lowered the rating on GoodRx Inc.’s first-lien credit facilities to B from B+ and revised the recovery rating to 2 from 3. This recovery rating reflects S&P’s expectations for meaningful (50%-70%; rounded estimate: 55%) recovery in the event of a payment default.

GoodRx is raising $155 million in incremental first-lien term debt and using the proceeds along with cash to pay off its $200 million second-lien term loan.

It is also extending the maturity on its $40 million revolver to 2024.

“The revision of our ratings outlook to positive from stable reflects our view of the credit impact of the proposed transaction, which will reduce debt by $45 million and the company’s interest burden by about $11 million in our 2020 base-case forecast. While the transaction will modestly improve our leverage forecast from about 5x to the high-4x area for year-end 2019, we believe that favorable investment returns on advertising spending will drive EBITDA expansion, thus lowering adjusted leverage below 4x by 2020. The first-lien credit facility downgrade reflects lower expected lender recoveries in our simulated default scenario give the increased recovery dilution for the increased amount of outstanding first-lien debt,” said S&P in a press release.

S&P affirmed GoodRx’s B rating.

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