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Rating Action:

Moody's rates Greenway debt; Corporate Family at B3, 1st Lien B1, 2nd Lien Caa2

Global Credit Research - 21 Oct 2013

$570 million of rated debt

New York, October 21, 2013 -- Moody's Investors Service ("Moody's") announced new debt ratings for Vitera Healthcare Solutions, LLC ("Vitera" and, after closing of the acquisition described below, "Greenway"). The Corporate Family rating ("CFR") is B3, the Probability of Default rating ("PDR") is B3-PD, the proposed senior secured revolving credit facility and senior secured 1st lien term loan are rated B1, and the senior secured 2nd lien term loan is rated Caa2. The ratings outlook is stable.

The proceeds of the new term loans will be used along with new equity invested by affiliates of Vista Equity Partners ("Vista") and balance sheet cash by Vitera to purchase Greenway Medical Technologies, Inc. ("GWAY"), repay existing debt, and pay associated fees and expenses. The combined business will use the Greenway brand.

RATINGS RATIONALE

The B3 CFR reflects Greenway's high financial leverage and elevated operating risks from planned merger, customer and product integration and restructuring initiatives. Moody's expects debt to EBITDA measured without the benefit of company adjustments and pro forma cost synergies to be very high in 2014; however, pro forma for the planned initiatives and Moody's standard adjustments, Moody's expects debt to EBITDA to decline to about 6 times for fiscal 2015 (ends September). While Vitera is profitable, GWAY had negative EBITDA and cash flows after deducting capitalized software expenses as of June 30, 2013. Moody's expects planned cost reductions to be fully achieved and evidenced through free cash flow growth during fiscal 2014 (ends September). Greenway has leading share in the competitive electronic health record and practice management software markets. Moody's expectations for continued high customer retention rates and for Greenway's physician practice and clinic customers to adopt revenue cycle management (RCM) software and services also support the rating. Cash equity invested by Vista since 2011 of over $550 million evidences additional support to the rating. Moody's expects free cash flow of at least $40 million per year in fiscal 2015, but only about $15 million in fiscal 2014. Adequate liquidity is provided by about $20 million of balance sheet cash, anticipated free cash flow growth and a fully-available $30 million revolving credit facility.

The stable ratings outlook reflects Moody's expectation for about 5% annual revenue and higher profit growth as increased subscription and service revenues from Greenway's RCM platform sold to Vitera and new customers more than replace anticipated revenue declines in software license and associated hardware and implementation service fees. The stable outlook also reflects expectations for steady and visible increases in free cash flow in each future fiscal period. The ratings could be lowered if revenues, profits or free cash flow do not grow as expected, resulting in expectations for debt to EBITDA to remain above 6.5 times and no free cash flow. A decline in liquidity could also result in a downgrade. The ratings could be raised if Moody's comes to expect expanded profits and debt reduction to drive debt to EBITDA to about 5.5 times and free cash flow to debt to be at least 5%, while Greenway maintains conservative financial policies.

Assignments:

....Corporate Family Rating, Assigned B3

....Probability of Default Rating, Assigned B3-PD

....Senior Secured Revolving Credit Facility due 2018, Assigned B1 (LGD3, 31%)

....Senior Secured 1st Lien Term Loan due 2020, Assigned B1 (LGD3, 31%)

Senior Secured 2nd Lien Term Loan due 2021, Assigned Caa2 (LGD5, 84%)

....Outlook, Assigned Stable

The principal methodology used in this rating was Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Greenway, controlled by Vista, is a provider of RCM, practice management software, electronic healthcare records, and other solutions sold to physician practices, community health centers and retail medical clinics. Moody's expects revenue of approximately $400 million in the fiscal year ending September 30, 2014.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Edmond DeForest
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Robert P Jankowitz
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's rates Greenway debt; Corporate Family at B3, 1st Lien B1, 2nd Lien Caa2
No Related Data.

 

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