Case Study

Undisclosed Outpatient Medical Center Operator

CLIENT: Undisclosed Outpatient Center Operator

Gordian successfully consummated a comprehensive restructuring of the Company’s balance sheet outside of bankruptcy, resulting in significant liquidity and covenant headroom for the Company to achieve a turnaround, while minimizing dilution to the private equity sponsor.

Situation

Within two years of its acquisition, the Company faced a liquidity crisis due to payroll and other growth investments (the benefits of which had yet to be realized), increased competition and other pressure that resulted in volume and margin declines and high debt service obligations.

Despite positive operating trends, the Company had seen its annual revenue fall by 20% and its annual EBITDA fall by 75% over the same timeframe, resulting in a highly overleveraged balance sheet and a meaningful capital requirement.

Gordian was engaged by the Company to help negotiate a restructuring between its senior lender (and minority equity holder) and private equity sponsor that would reduce the Company’s debt burden, properly incentivize Management and ensure access to sufficient capital to allow for the realization of its prior growth investments.

As part of its engagement, Gordian worked closely with counsel to advise the Company and its Board of its restructuring alternatives, including developing a negotiating strategy that created sufficient negotiating leverage for the Company vis-à-vis its creditors.

Engagement

The Company is a private, sponsor-backed provider of primary care-led services through several medical centers across the Southern US. The Company offers a wide range of clinical and other services, including primary care, specialty (e.g., cardiology, optometry, gynecology) and medical and ancillary services (e.g., 24/7 access, lab collection, diagnostics, dental care, rehabilitation, physical therapy, etc.).

Outcome

The Company ultimately consummated a restructuring that resulted in a deleveraging through the conversion of debt at a discount and meaningful debt service and covenant relief, while minimizing dilution to – and allowing for continued control by – the private equity sponsor.