Greenway Health, a Tampa, Fla.-based electronic health records vendor, expects 2021 EBITDA to be $70 million to $80 million and revenue to also be softer compared with 2020 at about $300 million amid lower demand due to the pandemic, according to sources. However, the company’s full-year operating/unadjusted EBITDA could benefit from an IFRS adjustment, one of the sources said. Continue reading as our Americas Core Credit team analyzes the potential 2021 Greenway Health EBITDA and revenue loss and Request a Trial for access to the linked documents as well as our analysis and reporting on hundreds of other stressed, distressed and performing credits.
In addition to lower demand, the company - which agreed
to pay $57.3 million in 2019 to resolve a Department of Justice case following allegations that it led its users to submit false claims to the government by misrepresenting the capabilities of its electronic health records product Prime Suite and providing unlawful compensation to its customers to induce them to recommend Prime Suite - continues to face a class-action lawsuit
brought on the same issue, the sources noted.
Greenway’s capital structure includes a $530 million L+375 bps first lien term loan due February 2024 and $30 million revolver due February 2022, according to Standard & Poor’s. The revolver is subject to a springing 7.95x net first lien leverage covenant when outstanding amount exceeds 35% ($10.5 million), according to a Feb. 25, 2020, Moody’s report.
The company’s term loan was quoted at 94/96 today, up from 92/93 at the beginning of 2021 and 89/91 in mid-November 2020, according to Solve Advisors.
According to Refinitiv’s LPC Collateral, there was buying in the loan at the beginning of December, the most recent being Park Avenue Institutional Advisers CLO selling $2,924,433.23 on Dec. 11 at 91. On Dec. 2, a number of CLOs sold the loan at 91, with the largest being Wescott Park CLO ($997,310.15), followed by Webster Park CLO ($904,844.12), Long Point CLO ($598,040.36) and Stewart Park CLO ($524,412.60).
Sculptor is the largest CLO holder of the loans with $81.9 million held across 29 funds, followed by CIFC with $27.3 million across 22 funds, Symphony with $16.1 million across 10 funds, Marble Point with $12.8 million across four funds, and Shenkman Capital Management with $12 million across seven funds, LPC Collateral’s database shows.
The company has $60 million of liquidity, including $30 million in cash and $30 million available under its revolver, according to sources.
Concerns about the company’s financial performance led one or two lenders to consider organizing earlier this year, the sources said, adding that a formal group was never formed.
As part of the settlement with the DOJ, Greenway Health entered into a five-year corporate integrity agreement, or CIA, that required the company to implement a comprehensive compliance program and hire an independent reviewer. In addition, the CIA required Greenway to offer its customers the latest version of Prime Suite for free or migrate them to other Greenway software products for free, or release them from their contracts.
The company also recorded a $14.8 million product reserve liability for fiscal year 2019 after multiple companies filed claims to the company to receive compensation for lost incentives and potential penalties in connection with certain product nonconformities which restricted them from full participation in various government incentive programs, according to the Moody’s report.
The Moody’s report said that the company has incurred large costs to implement the regulatory requirements, improve its products and restore product nonconformities, while at the same time dealing with the loss of customers. Greenway Health also continues to deal with a class-action lawsuit that was filed by Altamonte Pediatric in March 2020 for alleged fraud and other deceptive practices.
Founded in 1977, the company went public in February 2012. The company was taken private
in 2013 by Vista Equity Partners for $644 million. Under the terms of the agreement, Greenway Medical Technologies combined with Vitera Healthcare Solutions, and the resulting entity was Greenway Health.
Greenway Health and Vista Equity Partners did not immediately respond to requests for comment.