Moody's Downgrades Everise's Corporate Family Rating to Caa1

Moody's Ratings has issued a report downgrading BCP V Everise Acquisition LLC's corporate family rating (CFR) to Caa1 from B3, and its probability of default rating (PDR) to Caa1-PD from B3-PD. The action reflects Moody's expectation that operating performance will not improve significantly in the near term, and weakened liquidity will persist. Everise is a global provider of technology-enabled, omni-channel customer management services primarily to healthcare and insurance businesses. The company's credit profile benefits from its operations in relatively stable and highly regulated end markets, but faces challenges such as high concentration in the healthcare and insurance verticals, and a high concentration of revenue from its top three customers. Moody's expects that the company will continue to have a free cash flow deficit, as a result of weak operating performance and high interest expense burden.

Key Takeaways:

• Moody's downgraded Everise's corporate family rating (CFR) to Caa1 from B3, reflecting a persistent free cash flow deficit and weak liquidity profile.
• The company's reliance on its top three customers, which account for approximately 60% of pro forma revenue, highlights concentration risks.
• Everise faces challenges such as high concentration in the healthcare and insurance verticals, and a high concentration of revenue from its top three customers.
• Moody's expects that the company will maintain weak liquidity over the next 12 to 15 months, with around $34 million in cash and only $18 million available under its $90 million revolving credit facility.
• The company's credit profile benefits from its operations in relatively stable and highly regulated end markets, and high customer renewal rates that provide high revenue visibility.
• Everise has introduced the new digital EverAI platform, which streamlines agent recruitment and training to improve efficiency, but potential headwinds from major MA issuers continuing to seek margin recovery could lead to lower member enrollment and increased consideration of cost-saving measures.

Statistics:

• Free cash flow deficit expected to persist over the next 12-18 months.
• Debt/EBITDA expected to decrease to the high 6x range by 2026, down from 7.3x pro forma for acquisition as of 31 March 2025.
• Liquidity supported by around $34 million in cash and $18 million available under its $90 million revolving credit facility.
• Employee retention rates: high customer retention due to the company's embedded customer management services in its clients' systems.
• Revenue visibility: high revenue visibility due to high customer renewal rates.

Sources:

• Moody's Ratings, "BCP V Everise Acquisition LLC", published on [unspecified date].
• Moody's Ratings, "Business and Consumer Services", published in November 2021.
• Brookfield Asset Management Inc.
• Warburg Pincus International LLC.