Moody's assigns Symplr B3, loans B2

Moody's Investors Service said it assigned first-time credit ratings to Symplr Software, Inc., including a B3 corporate family rating, a B3-PD probability of default rating and B2 instrument ratings to Symplr's new first-lien debt, which includes a $680 million term loan and a $100 million revolving credit facility.

“The B3 CFR reflects Symplr's small scale, very high Moody's-adjusted opening pro forma debt-to-EBITDA leverage of roughly eight times, and integration risks as the healthcare GRC provider takes on, with private equity backing, TractManager, a smaller, less profitable provider of tech-enabled services that help healthcare providers and payers improve their credentialing, compliance, and supply chain efforts. Combined, the two companies will have a revenue base approaching $300 million, strong EBITDA margins, and free cash flow generation capabilities consistent with the CFR,” Moody’s said in a press release.

Proceeds from the first-lien term loan and a new, unrated $250 million second-lien term loan, as well as $566 million of new cash and rolled over equity, will be used to purchase TractManager. Transaction proceeds will also go towards refinancing Symplr's debt of $631 million and satisfying transaction fees and other administrative expenses.

The outlook is stable. “The stable rating outlook reflects Moody's expectation that top-line growth of at least 5 to 7% and the realization of synergies will allow for positive free cash flow as well as for modest deleveraging, albeit from a level that is high at the outset of the LBO,” the agency said.

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