Moody's assigns HealthCare Royalty Ba3

Moody's Investors Service said it assigned first-time ratings to HealthCare Royalty, Inc. and its indirect subsidiary HCRX Investments HoldCo, LP. The assigned ratings include a Ba3 corporate family rating, a Ba3-PD probability of default rating, Ba2 senior secured ratings and an SGL-1 speculative grade liquidity rating. The outlook is stable.

“HealthCare Royalty's Ba3 corporate family rating reflects its niche focus as an acquirer of royalty interests in pharmaceutical products. The company specializes in mid-sized royalty acquisitions with values generally between $20 million to $250 million. Many of the products are for critical health conditions, and the underlying sales outlook for the royalty-generating products is favorable. HealthCare Royalty's cash flow will remain solid, reflecting limited operating expenses and an efficient operating structure,” Moody’s said in a press release.

“Offsetting these strengths, the existing portfolio is moderately concentrated in three drugs that accounted for approximately 48% of revenue in 1Q 2021 and which Moody's believes will generate about half of 2021 royalty receipts, i.e. Vimpat, Shingrix and Zolgensma,” the agency added.

Term loan proceeds, IPO proceeds of about $500 million and the proceeds from an expected offering of about $750 million of senior unsecured notes will be used to recapitalize the company.

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