Fitch upgrades Red Ventures

Fitch Ratings said it upgraded the long-term issuer default ratings of Red Ventures Holdco, LP, Red Ventures, LLC and New Imagitas, Inc. to BB- from B+ following Red Ventures' creation of a joint venture with UnitedHealth Group. The agency also affirmed Red Ventures' and New Imagitas' senior secured debt at BB+/RR1.

Red Ventures received $2 billion in cash from UHG, a 50% interest in RVO Health, the joint venture, and equal board representation with UHG. RV Health's financials will be deconsolidated from Red Ventures' financial reporting.

Red Ventures repaid about $1.3 billion of debt (41% of total debt outstanding as of March 31 with a portion of the proceeds. As a result, Fitch-calculated leverage as of March 31, 2022, pro forma for the deconsolidation of Red Ventures' Health assets, the debt paydown and a full year of prior acquisitions, fell to about 3.7x.

“This debt reduction brings leverage in line with the company's 3x-4x leverage target range and was a primary driver of the long-term IDR upgrade. Fitch expects Red Ventures' leverage to remain within its new rating sensitivities despite recent softness in the company's financial segment and Fitch's expectation for an advertising recession in 2023,” the agency said in a press release.

The outlook is stable.

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