S&P rates MedImpact loan BB-

S&P said it assigned a BB- rating to MedImpact Holdings Inc.'s proposed $400 million first-lien term loan A due 2021, which is being issued by subsidiary MI OpCo Holdings Inc.

While MedImpact Holdings does not guarantee this debt, the agency said it considers MI OpCo as a core subsidiary of MedImpact Holdings given that that its business lines are integral and closely linked to MedImpact Holdings' overall strategy and identity, the agency said.

S&P also said it assigned a 2 recovery rating to this debt, indicating 70% to 90% expected default recovery.

The new term loan is rated the same as the company's existing $350 million term loan B facility, which it refinances, the agency said.

The corporate credit rating on MedImpact is B+ with a positive outlook.

The ratings reflect the company’s weak business risk profile, characterized by the company's limited market share in the highly competitive pharmacy benefit management market, S&P said.

Although only a handful of sizable competitors remain in the pharmacy benefit management marketplace following recent consolidation, MedImpact is dwarfed in scale by Express and CVS/Caremark, which together hold more than 60% of the market, the agency said.

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