Research Update: Veterinary Practice Management Company Pathway Vet Alliance LLC Assigned 'B' Rating; Outlook Stable

Private equity firm TSG Consumer Partners has acquired Pathway Vet Alliance LLC (Pathway) for a purchase price of $2.65 billion. Pro forma the transaction, adjusted leverage is around 10x and we expect it to be sustained above 7.5x through 2021. We are assigning our 'B' issuer credit rating to Pathway. The outlook is stable. We are also assigning our 'B' issue-level rating and '3' recovery rating to the proposed senior secured credit facility. The '3' recovery rating reflects our expectation for meaningful recovery (50%-70%; rounded estimate: 55%) in the event of payment default. The company's second-lien debt is unrated. The stable outlook reflects our expectation for double-digit revenue growth and discretionary cash flow generation, despite high adjusted leverage. The stable

...- Private equity firm TSG Consumer Partners has acquired Pathway Vet Alliance LLC (Pathway) for a purchase price of $2.65 billion. - Pro forma the transaction, adjusted leverage is around 10x and we expect it to be sustained above 7.5x through 2021. - We are assigning our 'B' issuer credit rating to Pathway. The outlook is stable. - We are also assigning our 'B' issue-level rating and '3' recovery rating to the proposed senior secured credit facility. The '3' recovery rating reflects our expectation for meaningful recovery (50%-70%; rounded estimate: 55%) in the event of payment default. The company's second-lien debt is unrated. - The stable outlook reflects our expectation for double-digit revenue growth and discretionary cash flow generation, despite high adjusted leverage....

Research Update