Sound Inpatient Physicians Inc. has hired PJT Partners for debt advice as the hospital-staffing company grapples with earnings pressure, according to people with knowledge of the situation.
Some of its lenders have already formed a steering committee and signed a cooperation agreement that will bind them to act together in negotiations, said the people, who asked not to identified because the matter is private. Typically lenders sign such agreements when they perceive a company to be struggling.
The cooperation agreement will be distributed to a broader group of lenders for signatures, one of the people said. The group, which consists of first-lien and second-lien borrowers, is getting advice from Evercore Inc. and Paul Weiss Rifkind Wharton & Garrison, the people added.
Representatives for Sound and Paul Weiss didn’t respond to requests for comment. Evercore and PJT declined to comment.
Loan Prices Dip
Sound and its lenders hired their respective advisers following a sharp drop in the company’s loan prices, the people said.
Sound’s first-lien term loan due 2025 has sunk to around 57 cents on the dollar, from around 80 cents at the start of the year, according to data compiled by Bloomberg. Its second-lien term loan due 2026 has also plummeted, and now changes hands for around 27 cents on the dollar.
Lenders to the company have offered to start debt talks or provide liquidity to the company, the people added. The group is seeking more disclosure about the company’s performance and additional information on the firm’s plans for tackling its 2025 loan maturity, the people added.
Based in Tacoma, Washington, Sound provides staffing services to facilities providing short-term care to patients, which can include intensive care or emergency medicine. Moody’s Investors Service slashed Sound’s corporate credit rating to Caa2 from B3 in October, citing earnings declines and operational challenges.
Medical-staffing firms have been struggling since the No Surprises Act went into effect last year. The law protects customers from large, unexpected bills when they receive out-of-network care and emergency services.
Last month, American Physician Partners said it was planning to wind down its operations. KKR’s Envision Healthcare Corp., another medical staffing firm, filed for bankruptcy in May.
A group of investors led by private equity firm Summit Partners acquired Sound from Fresenius Medical Care AG for $2.15 billion in 2018. Optum, which is part of UnitedHealth Group Inc., is also an investor, according to a report by Moody’s.
Representatives for Summit Partners and Optum didn’t respond to requests for comment.
Author: Reshmi Basu, Rachel Butt and Jill R. Shah